Do Public Real Estate Returns Really Lead Private Returns?

Alena Audzeyeva, Barbara Summers and Klaus Reiner Schenk-Hoppe
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Alena Audzeyeva: Keele University
Barbara Summers: University of Leeds
Klaus Reiner Schenk-Hoppe: University of Leeds

No 10-46, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: This paper proposes a novel approach to the estimation of Customer Lifetime Value (CLV). CLV measures give an indication of the profit-generating potential of customers, and provide a key business tool for the customer management process. Existing approaches show unsatisfactory performance in multi-service financial environments because of the high degree of heterogeneity in customer behaviour. We propose an adaptive segmentation approach which involves the identification of “neighbourhoods” using a similarity measure defined over a predictive variable space. The set of predictive variables is determined during a cross-validation procedure through the optimisation of rank correlations between the observed and predicted revenues. Future revenue is forecast for each customer using a predictive probability distribution based on customers exhibiting similar behavioural characteristics in previous periods. The model is developed and implemented for a UK retail bank; it is shown to perform well in comparison to other benchmark models.

Keywords: Finance; Profitability Forecasting; Bootstrapping; Customer Lifetime Value; CLV models; Customer Relationship Management. (search for similar items in EconPapers)
JEL-codes: C14 C53 M30 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2010-11
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp1046

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