Moneter : Jurnal Keuangan dan Perbankan
Vol. 11 No. 2 (2023)

RFM Analysis for Customer Lifetime Value with PARETO/NBD Model in Online Retail Dataset

Rama Aria Megantara (Universitas Dian Nuswantoro)
Farrikh Alzami (Universitas Dian Nuswantoro)
Ahmad Akrom (Universitas Dian Nuswantoro)
Ricardus Anggi Pramunendar (Universitas Dian Nuswantoro)
Dwi Puji Prabowo (Universitas Dian Nuswantoro)
Sasono Wibowo (Universitas Dian Nuswantoro)
Ritzkal Ritzkal (Universitas Dian Nuswantoro & Universitas Ibn Khaldun Bogor)



Article Info

Publish Date
03 Oct 2023

Abstract

In recent years, there has been a growing interest in analyzing Customer Lifetime Value (CLV) due to its ability to provide valuable insights into customer profitability and worth. CLV analysis predicts the net profit attributed to the entire future relationship with a customer. This analysis involves calculating the present value of a customer's expected future spending with the company, facilitating an understanding of the economic value of long-term customer relationships. CLV analysis empowers businesses to identify their most profitable customers and develop strategies for retaining them, ultimately maximizing long-term profitability. CLV analysis relies on various models and techniques, including the RFM analysis categorizes customers based on recency, frequency, and monetary value, helping to segment customers and predict future behavior. Then, The Pareto/NBD model combines probability distributions to estimate CLV and is commonly used for customer base analysis. This research article explores the application of RFM analysis for estimating customer lifetime value using the Pareto/NBD model in an online retail dataset. This metric is crucial for businesses as it assists in identifying valuable customers and formulating retention strategies to maximize long-term profitability.

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Journal Info

Abbrev

MONETER

Publisher

Subject

Education

Description

Moneter: Jurnal Keuangan dan Perbankan mempunyai fokus dalam kajian keuangan dan perbankan , dengan scope sebagai berikut: Dasar-dasar keuangan dan perbankan syariah dan konvensional Bisnis Teknologi ...