Now that we have all the basic building blocks (prob_models), we can build models to predict Customer Lifetime Value.

Customer lifetime value is the present value of the future cash flows associated with the customer.

The models we use to predict CLV however, will depend on the business setting.

Classifying Business Settings

It is important to distinguish between contractual and noncontractual settings:

• In a contractual setting, we observe the time at whicha customer ended their relationship with the firm.
• In a noncontractual setting, the time at which a customer "dies" is unobserved (This is challenging since we need a way to differentiate those customers who have ended their relationship with the firm versus those