Customer Lifetime Value and Defection Possibility Prediction Model Using Machine Learning: An Application to a Cloud-Based Software Company

This paper proposes an estimation of Customer Lifetime Value (CLV) for a cloud-based software company by using machine learning techniques. The purpose of this study is twofold. We classify the customers of one cloud-based software company by using two classifications methods: C4.5 and a support vector machine (SVM). We use machine learning primarily to estimate the frequency distribution of the customer defection possibility. The result shows that both the C4.5 and SVM classifications perform well, and by obtaining frequency distributions of the defection possibility, we can predict the number of customers defecting and the number of customers retained.