Dony Permana, Sapto Wahyu Indratno, Udjianna S. Pasaribu
Customer Lifetime Value or CLV is a restriction on interactive marketing to help a company in arranging financial for the marketing of new customer acquisition and customer retention. Additionally CLV can be able to segment customers for financial arrangements. Stochastic models for the fairly new CLV used a Markov chain. In this model customer retention probability and new customer acquisition probability play an important role. This model is originally introduced by Pfeifer and Carraway in 2000 [1]. They introduced several CLV models, one of them only involves customer and former customer. In this paper we expand the model by adding the assumption of the transition from former customer to customer. In the proposed model, the CLV value is higher than the CLV value obtained by Pfeifer and Caraway model. But our model still requires a longer convergence time. © 2014 AIP Publishing LLC.
Statistics Research Division, Faculty of Mathematics and Natural Science, Bandung Institute of Technology, Indonesia; Statistics Study Program, Faculty of Mathematics and Natural Sciences, Padang State University, Indonesia
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