A Model to Determine Customer Lifetime Value in Iranian Banking Industry

The concept of relationship management in marketing area has gained itsimportance through decades. CRM, pursue long-term relationship with profitablecustomers in the new mantra. The ultimate goal of any corporate initiative is profitability.In absence of any clear differentiation among the company clients or special valueproposition, companies often squander valuable company resources attempting to serviceall the customers that may or may not result in a profitable outcome. many researcheshave been performed to evaluate the customer value, However they lacks the empiricalevidence to their calculations, if not had some limitations in considering the customerchurn or potential value of the customers in expected future. The main objective of thispaper is to investigate the customer value in banking context using the customer lifetimevalue framework. The interviews with the expert show that currently customers aretreated the same. This study presents a detailed empirical evaluation of how accuratelythe value of corporate customers of a governmental bank in Iran can be measured. Theanalysis results in value identification and ranking of corporate customers. Additionally,to select the value generating customers (alternatives) for capital investment among thewhole customer portfolio of the bank, a finite number of alternatives have to be rankedconsidering several and sometimes conflicting criteria. Therefore, we are faced with aspecial multicriteria decision-making problem. The purpose of this study is to develop adecision-making model for selecting corporate customers in loan lending relationships ofthe banks customers and a model is provided in order to structure this problem. Theproposed model is structured by solicitation of banking experts. The preference rankingorganization method for enrichment evaluation (PROMETHEE) has been used forsolving the problem. The model has been applied in a governmentally owned bank ofIran as a real case with interview the experts in order to determine the effective criteriafor customer evaluation.Validerat; 20120816 (marikav