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RFM-Enriched Customer Lifetime Value

Predict the future value of your customers to optimize marketing spendings and maximize revenues with Dataiku.

The goal of this adapt and apply solution is to show retail organizations how Dataiku can be used to predict the customer lifetime value (CLV) of customers in order to optimize marketing spending and customer acquisition costs with a variety of predictive approaches.  More details on the specifics of the solution can be found on the knowledge base.

Highlights

  • Input transactional data to analyze your customer base distribution through a RFM* analysis.
  • Build an RFM-based customer segmentation.
  • Compute RFM-enriched Customer Lifetime Value for your customers and tier them accordingly: high, medium and low
  • Predict the future lifetime value of your customers across different dimensions
  • Identify products attracting the highest predicted CLV customers
  • Visualize outputs and embed RFM-enhanced CLV in your marketing and sales processes
*RFM: stands for “Recency, Frequency, Monetary value” is a marketing metric used to identify the value customers are worth to a company.

Business Overview

Efficiently managing an existing customer base is critical: acquiring new clients costs 5x more than retaining existing ones, and well designed customer lifetime value (CLV) supported strategies enable to deliver up to +30% life in salesIt is thus essential for retail brands to well understand their customer base across different dimensions and potential so as to answer the following strategic question: which customers should I invest into?

To do so, brands need to identify who their most valuable customers are, what their potential future spendings amount to, and how to engage with them. In other words, the ability to estimate current and future customer value is a huge opportunity to optimize marketing spendings and build long-lasting relationships with valuable customers. Combining different approaches and leveraging RFM analysis gives new opportunities to brands to make refined strategic choices in their sales and marketing programs.  

Installation

  • Requires DSS v9+
  • Prior to installation, your Dataiku instance Admin will need to create a code environment.  The full list of requirements can be found here.
  • This adapt and apply solution can be installed and used right away in one of two ways:
    • On your Dataiku instance click + New Project > Sample Projects > Solutions > RFM-Enriched Customer Lifetime Value
    • Download the .zip project file for your Dataiku version and import it directly to your Dataiku instance