Český finanční a účetní časopis 2013(4):84-95 | DOI: 10.18267/j.cfuc.355

Analysis of customer lifetime value model: Literature review

Petr Čermák
Mgr. Petr Čermák - doktorand; Katedra manažerského účetnictví, Fakulta financí a účetnictví, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3; <xcerp35@vse.cz>.

The financial performance of a company is evaluated by two models in the marketing and sale phase of business cycle: tactically oriented customer profitability analysis model (CPA) and strategically oriented customer lifetime value model (CLTV). The article surveys the current literature which deals with both marketing and sales models with the emphasis on the strategic customer lifetime value model. Furthermore the article studies strengths and limitations of different models used to determine the customer lifetime value with the respect on their application on real data. The paper concludes that there is a significant amount of limitations of the fundamental model CLTV leading to a bias CLTV determination of a customer. Their neglect may lead to poor strategic management decisions about the resource allocation within the customer portfolio.

Keywords: Customer profitability analysis (CPA); Customer lifetime value (CLTV).
JEL classification: M30

Published: December 1, 2013  Show citation

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Čermák, P. (2013). Analysis of customer lifetime value model: Literature review. Czech Financial and Accounting Journal, 2013(4), 84-95. doi: 10.18267/j.cfuc.355
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