| dc.description.abstract | Relationship between company and customers occurs due to marketing of the company products to customers and the transaction between customers and company. In the relationship between company and customers there is a term called recency which represents the number of months since the last transaction of a customer. Recency is assumed to form a Markov chain. Customer lifetime value (CLV) is a present value of future cash flow in customer lifetime transaction. CLV is used to determining the prospects of customer transactions in the future. The purpose of this manuscript is to model customer and company relations, to calculate customer lifetime value (CLV), and to apply the Markov chain model at the Oriflame company. Markov chain model is characterized by the number of states, transition probability matrix, and vector early probability. Through transaction data of the Oriflame customers, a transition probabilities matrix can be estimated using maximum likelihood method. CLV is calculated by Markov decision processes. The results shows that the relationship between the company and customers can be modeled with a Markov chain. | en |
