Customers lifetime value (CLV) is a complex phenomenon representing the value of a customer to a company in the form of the difference between the revenues gained and the expenses made projected into the entire future relationship with a customer.
Prediction of the CLV is typically assessed via customer behavior data in order to predict the customer's profitability for the insurer. Thus, the behavior-based models are widely applied to forecast cross-buying and retention. Recency, a monetary value of a customer for a company and frequency are regarded as important factors to calculate future income. The algorithms put together and process all the data to build the prediction. This allows forecasting the likelihood of the customers’ behavior and attitude, maintenance of the policies or their surrender. In addition, the CLV prediction may be useful for the marketing strategy development, as it renders the customers’ insights at your disposal.
