A Model of Customer Lifetime Value Consider with Word-of-mouth Marketing Value

With the rapid development of IT technology and fierce competition of market, the customer relationship management(CRM) has gained its importance in the market. Companies have attached importance to acquiring and retaining the most profitable customers. So calculating customer’s value is a significant segment for every effective CRM. Many researches have been performed to calculate customer’s value based on customer lifetime value (LTV). But, these calculations can’t effectively include the whole customer value, especially for the word-of-mouth marketing value. This paper proposes a new LTV model which considers the customer’s past profit contribution, potential value and word-of-mouth marketing value, and gives a more reasonable LTV value in CRM for the company to make a decision.