Exploit Customer Life-time Value with Memoryless Experiments

Zizhao Zhang; Yifei Zhao; Guangda Huzhang

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arXiv · 2201.06254

Exploit Customer Life-time Value with Memoryless Experiments

Zizhao Zhang·Yifei Zhao·Guangda Huzhang

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Abstract

As a measure of the long-term contribution produced by customers in a service or product relationship, life-time value, or LTV, can more comprehensively find the optimal strategy for service delivery. However, it is challenging to accurately abstract the LTV scene, model it reasonably, and find the optimal solution. The current theories either cannot precisely express LTV because of the single modeling structure, or there is no efficient solution. We propose a general LTV modeling method, which solves the problem that customers' long-term contribution is difficult to quantify while existing methods, such as modeling the click-through rate, only pursue the short-term contribution. At the same time, we also propose a fast dynamic programming solution based on a mutated bisection method and the memoryless repeated experiments assumption. The model and method can be applied to different service scenarios, such as the recommendation system. Experiments on real-world datasets confirm the effectiveness of the proposed model and optimization method. In addition, this whole LTV structure was deployed at a large E-commerce mobile phone application, where it managed to select optimal push message sending time and achieved a 10\% LTV improvement.

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Zizhao Zhang, Yifei Zhao, Guangda Huzhang. 2022-01-17. Exploit Customer Life-time Value with Memoryless Experiments. https://arxiv.org/abs/2201.06254

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