Session 7 - CLV & Logic Regression

Question 1

What is AER ?

Answer 1

Acquistion E Retention

Question 2

What is AER ?

Answer 2

Acquisition Expansion Retention (Growth)

Question 3

What is Cross-selling ?

Answer 3

It is when you are Microsoft and you have selling Office and you want to sell Microsoft Stream, it is cross selling.

Question 4

Cannibalization ?

Answer 4

When you promote a second product the users don’t buy the first one.

Question 5

What is Up-selling ?

Answer 5

The fact you are selling wine and they are buying one bottle at week. Now they are buying two bottles a week or a higher version of it.

Question 6

What is the Pareto principle ?

Answer 6

The Pareto principle is 80% effects come from 20% of the causes.

Question 7

Annual earning typically increase or decrease ?

Answer 7

On average, annual earnings typically increase over a customer’s life due to cross/up-selling.

Question 8

What should you do with Tier One customer ?

Answer 8

Reward

Question 9

What should you do with Tier Two ?

Answer 9

Grow

Question 10

What should you do with Tier Three ?

Answer 10

Fire them.

Question 11

What are the 5 different CLV ?

Answer 11

Main distinctions:

1. CLV versus post-acquisition value (PAV)
2. CLV versus residual lifetime value (RLV)
3. CLV versus historical value (HV)
4. CLV versus finite-horizon CLV
5. CLV versus undiscounted CLV

Question 12

CAC

Answer 12

Customer Acquistion Cost

Question 13

What is PAV ?

Answer 13

PAV = CAC + CLV

Question 14

What is Finite-horizon ?

Answer 14

…

Question 15

Expected value of CLV

Answer 15

E(CLV) = Somme of (E (Profit t) -CAC)

Question 16

In a subcription model is churn is observed or not ?

Answer 16

Yes it is observed.

Question 17

RFM Analysis ?

Answer 17

Is a Poor Man’s CLV Recency or time elapsed since last purchase, Frequency of purchases in last period, Monetary purchases in last period

Question 18

What is log odd ratio ?

Answer 18

de moins infini à plus infini

Question 19

What is a binary variable ?

Answer 19

Binary variables could take 0 or 1 as a value.

Question 20

What is a binary variable ?

Answer 20

Binary variables could take 0 or 1 as a value.

Question 21

The odd ratio ?

Answer 21

Va de 0 and infinity = relative risk is p/(1 -p)