Article
Empirical validation and comparison of models for customer base analysis
International Journal of Research in Marketing
(2007)
Abstract
The benefits of retaining customers have led companies to search for means of profiling their customers individually and tracking their retention and defection behaviors. To this end, the main issues addressed in customer base analysis are identification of customer active/inactive status and prediction of future purchase levels. We compare the predictive performance of Pareto/NBD and BG/NBD models from the customer base analysis literature — in terms of repeat purchase levels and active status — using grocery retail transaction data. We also modify the BG/NBD model to incorporate zero repeat purchasers. All models capture the main characteristics of the purchase and dropout process of individual customers and produce similar forecasts. There are some deviations in the cumulative purchase estimates of the models, which may be due to the characteristics of grocery purchasing.
Keywords
- Customer base analysis,
- Probability models,
- Pareto/NBDBG/NBD,
- Customer lifetime value
Disciplines
Publication Date
September, 2007
DOI
10.1016/j.ijresmar.2006.12.005
Publisher Statement
This is a manuscript of an article published as Batislam, Emine Persentili, Meltem Denizel, and Alpay Filiztekin. "Empirical validation and comparison of models for customer base analysis." International Journal of Research in Marketing 24, no. 3 (2007): 201-209.
Citation Information
Emine Persentili Batislam, Meltem Denizel and Alpay Filiztekin. "Empirical validation and comparison of models for customer base analysis" International Journal of Research in Marketing Vol. 24 Iss. 3 (2007) p. 201 - 209 Available at: http://works.bepress.com/meltem-denizel/2/