A high-performance turnkey system for customer lifetime value prediction in retail brands

Abstract

Customer lifetime value (CLV) modeling underpins modern marketing analytics, enabling the development of tailored customer relationship management strategies based on the predicted future value of their customers. As part of Amperity’s enterprise customer data platform (CDP), we deploy and maintain a CLV prediction system that caters to a rapidly growing list of brands across various industries, purchase behaviors, and scales. Given the impracticality of developing bespoke models for each brand, our solution must be adaptive, generalizable, and high-performing ”out of the box”. Furthermore, our platform demands daily prediction updates to facilitate prompt marketing decisions. This paper introduces a turnkey CLV prediction system that achieves state-of-the-art performance across a diverse set of brands. This system has several contributions: 1) the use of encodings and embeddings to incorporate signals from high-cardinality data; 2) a multi-stage churn-CLV modeling framework that augments additional flexibility in adjusting churn probabilities, subsequently reducing CLV prediction errors while maintaining a synergistic learning process; 3) a feature-weighted ensemble of both generative and discriminative models to accommodate diverse underlying purchase patterns. Empirical results show that our enhanced model consistently surpasses benchmark performances for twelve retail brands across six evaluation intervals from June 2020 to September 2022.