Research On The Improvement Of Customer Lifetime Value Model And Its Practice

Customer relationship management (CRM) caters for the change and development of market in the new economic environment. The theory and method of CRM can direct enterprises to adjust their customer relationship well, so more and more enterprises pay much attention to it. Customer lifetime value (CLV) is the key concept within CRM and it has become a main study area of CRM. The analysis of CLV is the precondition of identifying customers and allocating resources properly.For the reason above mentioned, the paper puts forward a new CLV model and applies it to the theory of customer equity portfolio management, based on the present study status on CLV, by the way of literature induction and antitheses. The major contents include:Firstly, the paper introduces the status in quo of CLV theory and correlative theories including customer equity theory and the difference and relation between the CLV theory and customer equity theory. All these theories provide the foundation for CLV model based on the word-of-mouth.Secondly, an expanded CLV model is presented based on the word-of-mouth. The CLV model is more and more progressional as the research goes deep into, yet there are also some limitations. The word-of-mouth is one of the factors, which is the very important behaviour of customer. So the paper analyses the effect of word-of-mouth, why it should be used, how to calculate the word-of-mouth parameter and how to obtain the active word-of-mouth detailedly.Finally, the advanced model based on the word-of-mouth is applies to the theory of customer equity portfolio management, and the new and Veteran customer equity portfolio management matrix are set up. How to identify valuable customers and allocate resources are the main tasks of CLV model. The paper borrows the idea of fractionizing customers using"static state—dynamic state"index of product portfolio management theory, founds a new index system and the improved CLV model is the static state index. This new method of customer subdivision is better to the traditional ways which makes up the shortages.