Customer Lifetime Value Analysis and Marketing Investment Optimisation in Nigerian Commercial Banks

This study analyses customer lifetime value (CLV) and its application in optimising marketing investment allocation among commercial banks in Nigeria, with evidence from banks operating in Enugu State, South East Nigeria, and Cross River State, South South Nigeria. CLV, the present value of future profits generated by a customer over their entire relationship with a firm, has emerged as a critical metric for prioritising marketing spend and identifying high-value customer segments. Despite its global adoption in bank marketing analytics, CLV-based investment optimisation remains underdeveloped in Nigerian commercial banking. Grounded in customer equity theory and the RFM (recency, frequency, monetary value) framework, the study operationalises CLV using transaction data and estimates its predictive accuracy for future revenue generation. The research combines retrospective analysis of anonymised customer transaction datasets from three cooperating banks with a survey of 110 bank marketing managers. Quantitative data are modelled using survival analysis and regression, while manager survey data are analysed descriptively. Preliminary findings indicate that CLV-based segmentation identifies a small high-value customer tier (approximately 20 percent of accounts) responsible for over 60 percent of relationship revenue, underscoring the marketing ROI implications of prioritising this segment. Recommendations are directed at bank CMOs, analytics teams, and relationship managers on embedding CLV metrics into marketing planning and resource allocation frameworks. Keywords: customer lifetime value, marketing investment, commercial banks, customer equity, Nigeria