Predicting Customer Potential Value: An Application in the Insurance Industry

Abstract

For effective Customer Relationship Management (CRM), it is essential to have information on the potential value of customers. Based on the interplay between potential value and realized value, managers can devise customer specific strategies. In this article we introduce a model for predicting the potential value of a current customer. Furthermore, we discuss and apply different modeling strategies for predicting this potential value.

Keywords: customer relationship management, customer potential, marketing models, insurance industry

JEL Classification: M, M31, C44