Bruce Ratner, Ph.D., Nov 2010
Life-time Value (LTV) modeling is common fair for management to determine marketing strategies vis-a-vis the ramifications at every level of customer engagement starting with brand awareness and ending in retention. LTV modeling of big-ticket items puts forth analytic-tactical issues because the sales patterns are "spotty".
Even high-generating sales representatives have corresponding arrays of sales with seemingly random months of no sales. The purpose of this article is to outline the approach of LTV modeling of big-ticket items. Analytically, the problem is modeling with monthly-sales variables, which are characterized by large mass of zeros (clearly, not the necessary condition of symmetric data for a good model).