1. Profitability Analytics Cloud Service User Guide
  2. Reports & Analytics
  3. Customer Profitability
  4. Instrument Level Aggregation and Insights
  5. Customer Life Time Value

9.6.1.4 Customer Life Time Value

To access the Customer Life Time Value report, from the LHS Menu, select Analytics, select Customer Profitability, and then select Customer Life Time Value.

Refer to the Runchart available at Doc ID: 2869409.1, then select and execute the Instrument Life Time Value with corresponding prerequisites mentioned in the Index tab of the Runchart.

To feed the Customer Life Time Value Report, refer to the Oracle Financial Services Profitability Analytics Cloud Service Data Flow document available at Doc ID: 2869409.1.

For the Customer Life Time Value Report, refer to the following Data Flow sub-section:

  • PACS – Instrument Life Time Value

CLTV – Customer Life time Value Calculation Method

We are looking at MTD account level NIBT values and then projecting into the future, the same using the Holt Winters algorithm available in the Oracle database. For arriving at CLTV, the first 30 months get forecasted and forecasts for the subsequent months are capped at the value of the 30th forecast obtained. In essence, we have the total account level NIBT contribution generated till date along with the forecasted contribution for 12, 36 and 60 months into the future. The future contributions for 1, 3 and 5 years are discounted using a discount factor to convert into a present value of future Cash Flows. The combined NIBT contribution generated till date and present value of future discounted Cash Flows give us the account level Lifetime value.

All the designated accounts of the customer are aggregated to arrive at the Customer Lifetime Value.

Sample of a hypothetical calculation method: Customer A has fairly constant NIBT at 100K USD every month (a bit variance here and there) whereas Customer B has an increasing NIBT (start with 80K USD and reaching 120K USD). Both have same CLTV Till Date, but Customer B will have higher forecasted CLTV (5 year) since monthly YTD NIBT shows increasing trend for customer B.

Customer Life time Value Analytics Metrics

  • Total Forecast Income: calculated as Total Forecast Net Income Before Taxes (discounted for present value using the discount factor that has been set up from Preferences UI), the chart shows value for customer accounts as bar including min/max and average value via mouse over the tile chart
  • Customer Life Time Value (Till Date): calculated as the aggregated value of monthly Net Income Before Taxes for latest 36 months.
  • The value of Customer Life Time Value with n year projection (where n = 1,3,5 with each year having 12 monthly forecasts) is arrived at by adding the discounted forecasts for Net Income Before Taxes to the Customer Life Time Value (Till Date) over next n years.

    Two customers with same Customer Life Time Value (Till Date) may have different CLTV (5 Yr projection) if they exhibit different trends. The customer showing growth in his portfolio (Net Income Before Taxes) will be expected to have a higher CLTV (5 Yr projection).

    • CLTV (1 Yr projection)
    • CLTV (3 Yr projection)
    • CLTV (5 Yr projection)

    Figure 9-147 Customer Life Time Value - 5 years


    Customer Life Time Value - 5 years

The aforementioned CLTV – Customer Life time Value Analytics metrics are available in the out-of-the-box Customer Profitability Report as well as in the following subject area (the available granularity for these metrics is at account contract level):

Figure 9-148 Customer Life Time Value


Customer Life Time Value