What is CLTV modeling in SAP CRM - Customer Relationship Management?

SAP Term: CLTV modeling

• Component: CRM

• Component Name: Customer Relationship Management

• Description: The settings in SAP BW that are used to predict, on the basis of historic data about a customer segment such as profit per customer, customer retention rate, and customer lifetime value CLTV, how that customer segment is likely to develop. CLTV modeling encompasses The CLTV model, in which the historic data is determined automatically or entered manually, and The CLTV prediction, used to predict future behavior on the basis of a CLTV model.

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• Key Concepts:
  CLTV modeling stands for Customer Lifetime Value modeling. It is a predictive analytics tool used in Customer Relationship Management (CRM) to measure the value of a customer over their lifetime. It helps businesses identify and prioritize customers based on their potential value, allowing them to focus their marketing efforts on the most profitable customers.
  
  How to use it:
  CLTV modeling can be used to identify and prioritize customers based on their potential value. It can also be used to determine the best marketing strategies for each customer segment, as well as to forecast future customer behavior.
  
  Tips & Tricks:
  When using CLTV modeling, it is important to consider the customer’s entire lifetime value, not just their current value. This will help you identify and prioritize customers who have the potential to become more valuable over time. Additionally, it is important to consider the cost of acquiring new customers when evaluating the value of existing customers.
  
  Related Information:
  CLTV modeling is closely related to other predictive analytics tools such as customer segmentation and predictive analytics. Additionally, it is often used in conjunction with other CRM tools such as customer segmentation and customer journey mapping.