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Online Customer Lifetime, Purchase Decision, and Customer Profitability
Lin Lin,
Lehigh University
Johnny Jiungyee Lee, Villanova University
Paul Hu, University of Utah
Olivia Sheng, University of Utah
ABSTRACT. Customer profitability is interested to managerial accountant and customer lifetime is critical to CRM. Customer lifetime literature has focued on conventional, non-electronic business settings. E-commerce firms can track customers’ visiting behaviors. Such visiting behaviors offer additional insights into customers’ intention. In this study, we developed an analytical model for predicting Online Customer Lifetime (OCL) an estimated time horizon within which an individual will to maintain active with a firm. Using click-stream data, we empirically validated our analytical model. Our results suggest a positive correlation between OCL and purchase decision as well as firm profit gain. This paper contributes to both managerial and e-commerce literature. Using OCL combining with marketing cost information, managerial accountant can better pin point customer profitability. E-commerce firms can utilities customers visiting information that is ignored in tradition customer life time.
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