Current Issues and Challenges of Estimating Lifetime Value of ‘Free Customer’ in Malaysia: An Un-Structured Interview Approach with Industrial Expertises

Abstract

Traditionally, the world wide businesses has being applied customer lifetime value (CLV) model for estimating their profitability by counting contribution of customer toward the business. The strategic used of CLV model is for understand and analyzing the lifetime values of each customer directly on their spending and purchasing activities. Currently, managing CLV has faced some current issues and challenges specifically on predicting a specific category of customer, called ‘free customer’. In fact, ‘free customer’ is non-database customer and their information is not available to any business. This category of customer always neglect and un-counting contribution, as well as them lifetime value that could be potentially affects the future prospect of the business. The study is aimed to explore current issues and challenges on implementations of CLV model with specific reference to ‘free customer’ of the hypermarket business. Secondly, the theoretical point of view on CLV will reviewed by using previous selected literature, as well as to explain the current issues and trends of CLV of the study. The method used is semi structured interview with the key person of Industrial Expertise. Meanwhile, the International Hypermarket at Seberang Perai of Pulau Pinang, Malaysia is selected as a reference location regarding the interview session. At the end, suggestion will be made for using geographical information system (GIS) approach for strengthening the traditional ways of understanding CLV of ‘free customer’ where it used map as platform of visualization the location of ‘free customer’.

Key words: Lifetime value; Free customer; International hypermarket; Seberang Perai of Penang