Mining for profitable customers

Customers are not created equal. However, segmenting customers in terms of their profitability is still an underutilized approach in marketing nowadays. Many E-commerce sites still apply the same customer care to all customers without calculating whether the expected profit from a customer is greater than the marketing cost to her or not. In this paper, a decision theoretic approach to segmenting customers based on a RFM (recency frequency and monetary) model and network value has been proposed here.