Buy Till You Die: Understanding Customer Lifetime Value

Knowing how much value each particular customer adds to your business is crucial, not least because it helps define the customer acquisition and retention budgets. Customer Lifetime Value models are a useful tool for gaining such insights. There seems to be, however, a lot of confusion about them, and apparently, everyone is using them wrong. How can we predict lifetime value and customer churn from transaction data only? What does BG/NBD stand for?