The University of Southampton
University of Southampton Institutional Repository

Customer migration, campaign budgeting, revenue estimation: the elasticity of Markov decision process on customer lifetime value

Customer migration, campaign budgeting, revenue estimation: the elasticity of Markov decision process on customer lifetime value
Customer migration, campaign budgeting, revenue estimation: the elasticity of Markov decision process on customer lifetime value
To predict the profitability of a customer, today’s firms have to practice Customer Lifetime Value (CLV) computation. Different approaches are proposed in the last ten years to analyze the complex customer phenomenon. One of them is Markov Decision Process (MDP) model. The class of Markov Models is an effective and a flexibility decision model. Whereas the use of MDP model is limited by its assumption, in this paper, we attempt to introduce an extension model for MDP: Higher-order Markov Decision Model (HMDP). HMDP can perform excellently in CLV calculation and overcome the limitation of MDP. By using a real application, we will demonstrate how it can be used efficiently in a firm’s daily operations.
customer lifetime value, higher-order markov decision process
1841-4311
65-80
Ching, W.K.
cd5eec0a-5a2b-4ec3-b588-a5db59f5fe8f
Ng, M.K.
a9816f6a-e461-4924-9b22-df9f97af2594
So, M.C.
c6922ccf-547b-485e-8b74-a9271e6225a2
Ching, W.K.
cd5eec0a-5a2b-4ec3-b588-a5db59f5fe8f
Ng, M.K.
a9816f6a-e461-4924-9b22-df9f97af2594
So, M.C.
c6922ccf-547b-485e-8b74-a9271e6225a2

Ching, W.K., Ng, M.K. and So, M.C. (2004) Customer migration, campaign budgeting, revenue estimation: the elasticity of Markov decision process on customer lifetime value. Advanced Modeling and Optimization, 6 (2), 65-80.

Record type: Article

Abstract

To predict the profitability of a customer, today’s firms have to practice Customer Lifetime Value (CLV) computation. Different approaches are proposed in the last ten years to analyze the complex customer phenomenon. One of them is Markov Decision Process (MDP) model. The class of Markov Models is an effective and a flexibility decision model. Whereas the use of MDP model is limited by its assumption, in this paper, we attempt to introduce an extension model for MDP: Higher-order Markov Decision Model (HMDP). HMDP can perform excellently in CLV calculation and overcome the limitation of MDP. By using a real application, we will demonstrate how it can be used efficiently in a firm’s daily operations.

Full text not available from this repository.

More information

Published date: 1 May 2004
Keywords: customer lifetime value, higher-order markov decision process

Identifiers

Local EPrints ID: 180723
URI: https://eprints.soton.ac.uk/id/eprint/180723
ISSN: 1841-4311
PURE UUID: 42ebafdb-5de6-4854-8c9c-95044e2d779f
ORCID for M.C. So: ORCID iD orcid.org/0000-0002-8507-4222

Catalogue record

Date deposited: 14 Apr 2011 11:36
Last modified: 04 Oct 2018 00:32

Export record

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of https://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×