Solutions Accelerator Demo Customer Lifetime Value (CLV)

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Video transcript

Welcome to the Databricks Solution Accelerator demos – your fast preview of how to apply these pre-built notebooks based on best practices to solve common business problems. Today we will be looking at the Solution Accelerator for customer lifetime value.

customer lifetime value, just like all customer analytics, is a key area of focus for the lakehouse. Most organizations are coming to the realization that not every customer is equally profitable and it is important for them to understand who their good customers are, and who they’re not. So they can adjust investments in the good ones and bring everybody to net profitability. The standard tool for this is an estimation of customer lifetime value. Simply put, customer lifetime value is an estimate of the value that we expect to obtain from a customer. Whether that’s in terms of spend, or margin for each have some number of future periods, typically three to five years. Not knowing whether the customer will stay engaged for that time period, we have to incorporate a retention estimate into our considerations. And of course, we have to apply discounts for future revenues. Summing this all up, we arrive at a potential sum that we expect to obtain from a customer for the period of interest.


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