Segmentation and Lifetime Value Models Using SAS

5The Migration Model

Contents

5.1 Migration models: spreadsheet approach

5.2 Migration model: matrix approach

5.3 Estimating transition probabilities

5.4 Chapter summary

     This chapter discusses one model for estimating CLV when an organization does not have contractual relationships with its customers. We assume that such organizations acquire customers who might or might not generate profit during discrete, equal-length periods of time such as a month or a year. In contrast, the retention model from the previous two chapters assumes that inactivity indicates the end of the relationship. The migration model covered in this chapter assumes that inactivity does not necessarily signal the end of the relationship.

     This migration model ...