Segmentation of Bank Customers based on Customer Lifetime Value and Their Profit Ability (Case Study: Customers of Entrepreneur Bank)

The present research was carried out with the aim of segmenting bank customers based on customer lifetime value (CLV) and their ability to make a profit in one of the branches of Karafarin Bank. For this purpose, Qard al-Hasan savings accounts of this branch were selected for a period of four years and were regarded as the basis for the analysis and implementation of the research framework. The researchers used the clustering method to calculate CLV and to conduct the segmentation process. Moreover, considering CLV-related parameters, the researchers presented a special mathematical relationship to calculate CLV. The accounts forming a sample of ten thousand items were segmented based on such factors as retention rate, attrition rate, inflation, as well as average inventory. The resulting segments included six categories with the titles of golden customers, customers with reasonable profitability, customers with average profitability, customers with more or less average profitability, customers with low value, and customers with the lowest value. Segmenting the market based on customer lifetime value in a private bank is the most important innovation of this study, which complements previous research findings in the area of banking marketing. Given that the services and products offered in banks should be based on a better understanding of customers, this article aims to provide bank managers with a perspective so that they can identify profitable customers.