Which of the following statements does not describe how retailers use a customer lifetime value (CLV)?
A) CLV is used to identify and cater to the best and more profitable customers.
B) CLV should be estimated under the assumption that the customer's future purchase behaviors will be the same as they have been in the past.
C) Sophisticated statistical methods are typically used to estimate the future contributions from past purchases.
D) An RFM analysis is often used by catalog retailers and direct marketers in estimating their customers' lifetime value.
E) A customer who spends $800 twice a year has a higher CLV than a customer that spends $100 each month.

Question

Quizplus · Accepted Answer

To estimate CLV, retailers use past behaviors to forecast future purchases. A customer who spends $100 each month would have a higher CLV because of their recency and frequency levels. Therefore, there is better potential to build this customer into a more valued customer than the one who just shops at the retailer twice a year.

Which of the Following Statements Does Not Describe How Retailers