1. Business User Guide
  2. Components of OFS PA
  3. Lifetime Value

Lifetime Value

The OFS PA Applicationa provide with the capability to compute Customer Life Time Value based on Accounts of the Customer and the Net Income generated through these Accounts. This feature predits the future value based on past data. This predicted value is aggregated for each selected Customer to compute Customer Life-Time Value (CLTV). The user can analyze CLTV for different periods of projections and select the projected data for the reporting CLTV.

Life Time Value calculations at a customer level are based on the following:

  • Summation of the Actuals till date
  • The value forecasted for each of the Accounts over the tenure of the Product

These are approximated to a maximum tenure of five years using ARIMA Models. The following computations were made for reporting purposes:

  • Customer Life Time Value (Value Till Date)
  • Customer Life Time Value (Value Till Date + discounted 1 year forecast)
  • Customer Life Time Value (Value Till Date + discounted 3 years forecast)
  • Customer Life Time Value (Value Till Date + discounted 5 years forecast)

The Bank has the option to input a discount rate during Application setup through the UI.

Enhanced Customer Life Time Value:

The PA Applications can compute the Customer Life Time Value considering the accounts of the customer and the net income generated through these Accounts is past as well as the Projected Income. This functionality is extended to compute Enhanced Customer Life Time Value; wherein the income generated through any probable Accounts that the Customer might purchase are also considered. The probable new products to be taken up by the Customer are arrived at using a threshold-based cut-off of the cross-sell score generated in RCA. The segment average NIBT is used to come up with the enhanced value.