Customer Life Time Value Forecast Using BYDT Models
TekMetrix AnalyticAI uses trusted Buy Till You Die (BTYD) models. These models are a class of statistical models designed to capture the behavioral characteristics of non-contractual customers, where the corporate entity cannot directly observe when a customer stops being a customer. The goal of BTYD models is to forecast customer lifetime value by jointly modeling two processes:
- Repeat purchase process - This explains how frequently customers make purchases while they are still "alive" (active).
- Dropout Process: This models how likely a customer is to churn (stop being a customer) in any given time period.
Common versions of BTYD models include the Pareto/NBD model and the Beta-Geometric/NBD model. These models help businesses understand customer purchasing behavior and predict future purchasing patterns. Below is a TekMetrix AnalyticAI case history for developling an Industry CPG BYDT model and subsequent customer lifetime value.
