“Counting Your Customers” the Easy Way: An Alternative to the Pareto/NBD Model

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Bibliographische Detailangaben
Beteiligte: Fader, Peter S., Hardie, Bruce G. S., Lee, Ka Lok
In: Marketing Science, 24, 2005, 2, S. 275-284
veröffentlicht:
Institute for Operations Research and the Management Sciences (INFORMS)
Medientyp: Artikel, E-Artikel

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weitere Informationen
Umfang: 275-284
ISSN: 0732-2399
1526-548X
DOI: 10.1287/mksc.1040.0098
veröffentlicht in: Marketing Science
Sprache: Englisch
Schlagwörter:
Kollektion: Institute for Operations Research and the Management Sciences (INFORMS) (CrossRef)
Inhaltsangabe

<jats:p> Today’s managers are very interested in predicting the future purchasing patterns of their customers, which can then serve as an input into “lifetime value” calculations. Among the models that provide such capabilities, the Pareto/NBD “counting your customers” framework proposed by Schmittlein et al. (1987) is highly regarded. However, despite the respect it has earned, it has proven to be a difficult model to implement, particularly because of computational challenges associated with parameter estimation. </jats:p><jats:p> We develop a new model, the beta-geometric/NBD (BG/NBD), which represents a slight variation in the behavioral “story” associated with the Pareto/NBD but is vastly easier to implement. We show, for instance, how its parameters can be obtained quite easily in Microsoft Excel. The two models yield very similar results in a wide variety of purchasing environments, leading us to suggest that the BG/NBD could be viewed as an attractive alternative to the Pareto/NBD in most applications. </jats:p>