The Role of Time-Varying Contextual Factors in Latent Attrition Models for Customer Base Analysis
| Autor: | Jeffrey Näf, Markus Meierer, Patrick Bachmann |
|---|---|
| Přispěvatelé: | University of Zurich |
| Rok vydání: | 2021 |
| Předmět: |
Computer science
Process (engineering) UFSP13-1 Social Networks Customer relationship management probability models Pareto/NBD customer relationship management latent attrition contextual factors customer lifetime value 10004 Department of Business Administration Customer base 0502 economics and business Econometrics medicine Attrition 050207 economics Business and International Management Consumer behaviour Marketing business.industry 05 social sciences Pareto principle Customer lifetime value Benchmarking medicine.disease 330 Economics 050211 marketing business |
| Zdroj: | Marketing Science, 40 (4) |
| ISSN: | 1526-548X 0732-2399 |
| Popis: | Customer base analysis of noncontractual businesses builds on modeling purchases and latent attrition. With the Pareto/NBD model, this has become a straightforward exercise. However, this simplicity comes at a price. Customer-level predictions often lack precision. This issue can be addressed by acknowledging the importance of contextual factors for customer behavior. Considering contextual factors might contribute in two ways: (1) by increasing predictive accuracy and (2) by identifying the impact of these determinants on the purchase and attrition process. However, there is no generalization of the Pareto/NBD model that incorporates time-varying contextual factors. Preserving a closed-form maximum likelihood solution, this study proposes an extension that facilitates modeling time-invariant and time-varying contextual factors in continuous noncontractual settings. These contextual factors can influence the purchase process, the attrition process, or both. The authors further illustrate how to control for endogenous contextual factors. Benchmarking with three data sets from the retailing industry shows that explicitly modeling time-varying contextual factors significantly improves the accuracy of out-of-sample predictions for future purchases and latent attrition. Marketing Science, 40 (4) ISSN:0732-2399 ISSN:1526-548X |
| Databáze: | OpenAIRE |
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