Products and Customer Worth
This section investigates the relationship between products and customer worth. It starts with the question of whether good customers are consistent over time in their purchasing behavior. It then looks at the relationship between products on the one hand and good and bad customers on the other. Finally, this section defines and measures residual value.
Consistency of Order Size
Each order is a certain size, which can be defined in terms of its total value (amount paid). Over time some customers place multiple orders. Are orders consistently about the same size for a given customer? Or do the orders for a given customer vary significantly in size? The answers to these questions can give some indication of price sensitivity. For instance, if customers tend to have orders that are similar in size, we want to be cautious about recommending products that are either much more or much less expensive than the ones they have already ordered. On the other hand, if...