Customer Lifetime Value Prediction: Towards the Paradigm Shift of Recommender System Objectives

The ultimate goal of recommender systems is satisfying users’ information needs in the long term. Despite the success of current recommendation techniques in targeting user interest, optimizing long-term user engagement and platform revenue is still challenging due to the restriction of optimization objectives such as clicks, ratings, and dwell time. Customer lifetime value (LTV) reflects the total monetary value of a customer to a business over the course of their relationship. Accurate LTV prediction can guide personalized service providers to optimize their marketing, sales, and service strategies to maximize customer retention, satisfaction, and profitability. However, the extreme sparsity, volatility, and randomness of consumption behaviors make LTV prediction rather intricate and challenging. In this tutorial, we give a detailed introduction to the key technologies and problems in LTV prediction. We present a systematic technique chronicle of LTV prediction over decades, including probabilistic models, traditional machine learning methods, and deep learning techniques. Based on this overview, we introduce several critical challenges in algorithm design, performance evaluation and system deployment from an industrial perspective, from which we derive potential directions for future exploration. From this tutorial, the RecSys community can gain a better understanding of the unique characteristics and challenges of LTV prediction, and it may serve as a catalyst to shift the focus of recommender systems from short-term targets to long-term ones.