Question - Why average Monetary value and not Total meontary value?

[SSMK-wq]

Hi,

q1) I read about Recency, Frequency and Monetary technique and I see that a customer worth is determined by his total revenue that company achieved from a specific customer.

But I see that lifetimes package uses Average revenue. Is there any reason why you consider Average revenue only? If a new customer comes with 2 transactions places huge order for 100K and 200K, then he contributed 300K to the company and could be classified as "New but promising" or "New but Heavy spender" etc.

But doesn't taking average normalize everyone on the equal scale? So, then monetary value doesn't become useful metric to segment customers. Instead we have to use only Recency and Frequency (because they have raw values).

Is there any reason why you think average revenue is better than Total revenue?

q2) I also understand that for the purpose of modeling, you remove only 1 transaction records. but can help me understand how is removing 1 transaction customers from the dataset is helpful? We might lose focus of these customers if we remove them from our analysis. Is it because they don't have enough history to model?

q3) - Why is the 1st record of each customer removed when they have done multiple transactions? For ex: If a customer has done 10 transactions, why do you remove the 1st transaction?