A metric for customer lifetime value of credit card customers

Estimating customer lifetime value (CLV) is becoming increasingly important in order for firms to identify and invest on prospective profitable customers. A credit card issuer firm has to take several different decisions regarding a customer throughout her stay with the firm. CLV estimation can help a firm in making some of these crucial decisions. In this paper, we have presented a conceptual model for revenue from a credit card customer and have further presented a metric for CLV. This metric has been designed specifically for credit card customers. We have simulated different states of a customer to demonstrate how the proposed metric works.