This thesis focuses on customer lifetime value and its application to a specific company that sells forestry materials used for logging. Transactional data on customers' purchasing behaviour from January 2020 to April 2024 is analysed. The theoretical part is used to provide a theoretical basis for the practical part with the help of literature. In the practical part, first the firm and its customers are introduced. Costs are assigned to the customers using activity-based costing to determi... show full abstractThis thesis focuses on customer lifetime value and its application to a specific company that sells forestry materials used for logging. Transactional data on customers' purchasing behaviour from January 2020 to April 2024 is analysed. The theoretical part is used to provide a theoretical basis for the practical part with the help of literature. In the practical part, first the firm and its customers are introduced. Costs are assigned to the customers using activity-based costing to determine their profit. Then, the Recency-Frequency-Monetary models, the historical customer lifetime value model and the probabilistic model for CLV are applied by using data. Using the resulting values from the models, segmentations of customers into groups are created and these are compared with actual buying behaviour. The profitability of the company's customers is also analysed using CLV. It was not possible to identify the better CLV model, but both were sufficiently accurate for implementation. Based on the CLV values from it the most profitable customers have been identified. |