A Customer Segmentation Model Research Based On Customer Life Time Value: A Case Study On The Wireless Telecom Industry

Owing to the coming of 3G, intense competition would occur in the domestic telecommunication market. The thing that really matters in the competition is the ownership of high-quality customers and customer segmentation is the prerequisite and foundation. At present, the current segmentation method is simply an experience and statistics based system, which does not involve the future value of the customer and his life cycle. As a result, these methods are could not identify the real high-quality customers and the differentiated marketing strategy would not be as effective as predicted. Thus, to identify the real high-quality customers, it is crucial for a telecommunication carrier to establish a precise and smart customer segmentation model based on the CLV (customer life value) theory as well as the data mining technology.Based on the theories of customer segmentation, customer segmentation methods and customer lifetime value, the paper studies customer segmentation model on the Chinese telecommunication industry from the customer lifetime value perspective.Firstly, the paper improves customer lifetime value model to put forward a new model. The paper changes the potential value model to make it easy to calculate; the paper also introduces the customer loyalty and customer credit effect to the CLV model. What's more, data mining technology is used when building the model. It's deeply believed that the modified model can reflect the state of the customers'value more objectively and realize classification of customers with different values.Secondly, based on the modified CLV model, the paper put forward a three-dimension (customer current value, customer potential value, customer relationship value) customer classification and made an in-depth research in the differentiated marketing strategy based on the customer lifetime value segmentation.At last, the paper elaborates theoretically the strategic importance on the application of consumer segmentation in telecommunication business based on customer lifetime value. To prove the model and the theory, the paper applies the CLV segmentation into a China Unicom carrier and achieves a very good feedback.By using the above models to classify customers, leaders of the corporate can identify valuable customers and recognize customer's behavior more effectively. They can take different marketing strategies according to different valuable customers, and put limited resource to the most valuable customers, so as to enhance the competitiveness of the corporate and bring long-term interests.