Estimate average spend per transaction using the Gamma‑Gamma model and pair it with a frequency model to project CLV. Learn the key assumptions, data requirements, and how to interpret parameters safely.
The Gamma‑Gamma model estimates a customer’s ______ per transaction.
sessions per visit
average monetary value
days‑to‑reorder
probability of churn
A key assumption of Gamma‑Gamma is that monetary value is ______ of purchase frequency given customer heterogeneity.
a linear function
independent
monotonically increasing
the same across all users
Gamma‑Gamma typically models each customer’s average spend using a ______ distribution at the population level.
normal
poisson
gamma
bernoulli
To compute CLV, Gamma‑Gamma is often paired with a ______ model for purchase frequency.
BG/NBD
logistic regression
HMM only
ARIMA
Before fitting, transaction values should be cleaned to be ______ of taxes, shipping, and returns where appropriate.
gross
net
indexed arbitrarily
duplicated
A practical data requirement for stable Gamma‑Gamma estimates is that customers have ______ monetary observations.
exactly one
zero
a fixed three
more than one
If high‑frequency buyers also spend much more per order, the independence assumption may be violated, causing CLV to be ______.
unchanged
guaranteed conservative
biased
exact
When reporting CLV, teams often multiply forecast revenue by contribution margin and may apply a ______ rate.
burst
discount
hash
sampling
Holdout evaluation for Gamma‑Gamma commonly compares predicted vs. actual spend using metrics like ______.
MAPE or RMSE
ROC‑AUC
mAP@K
BLEU
Parameter interpretation: in many parameterizations, larger shape parameters (e.g., p and q) imply ______ dispersion in spending means across customers.
infinite
undefined
lower
higher
Starter
Good start—revisit the Gamma‑Gamma assumption set and how it pairs with BG/NBD for CLV.
Solid
Strong—clean net monetary values and validate forecasts with holdouts and error metrics.
Expert!
Excellent—stress‑test the independence assumption and align CLV with margin and discounting for finance.
