Predicting customer potential value an application in the insurance industry

For effective Customer Relationship Management (CRM), it is essential to have information on the potential value of customers. Based on the interplay between potential value and realized value, managers can devise customer specific strategies. In this article we introduce a model for predicting the potential value of a current customer. Furthermore, we discuss and apply different modeling strategies for predicting this potential value. Key-words: Customer Relationship Management, Customer Potential, Marketing Models, Insurance Industry * Corresponding Author: Peter C. Verhoef, Erasmus University Rotterdam, Department of Marketing and Organization, Office H15-12, P.O. Box 1738, NL-3000 DR Rotterdam, The Netherlands, Phone +31 10 408 2809, Fax +31 10 408 9169, Email:[email protected], http://www.few.eur.nl/few/people/verhoef † Bas Donkers, Erasmus University Rotterdam, Department of Marketing and Organization, Office H15-12, P.O. Box 1738, NL-3000 DR Rotterdam, The Netherlands, Phone +31 10 408 2411, Fax +31 10 408 9169, E-mail: [email protected]