Customer Lifetime Value in Retail 

Purpose

In order to use Customer Lifetime Value (CLTV) you need to have carried out a segmentation of your customers beforehand and be able to access the segmentation characteristic in SAP BW as a property of the customer. You therefore need to decide which segmentation you want to use in your CLTV analysis.

In a customer-only information system you have the option of using the results obtained from your ABC analysis as segmentation characteristics. Examples of this are the (classic) ABC analysis and the loyalty analysis.

In a customer/article information system you can also use results from Clustering Analyses.

If you do not want to use the results of analyses for segmentation, you can use characteristics in the customer master instead. For example, you can create segments according to regions. If you do this, however, you should make sure that your customer data is correct. This requires that you are kept informed of changes to this data. If this is not the case, you run the risk of your data no longer being up-to-date and your analyses being misrepresentative.

 

See also:

Customer Lifetime Value Analysis: Overview