Henry Stewart Survival Analysis

Applications of Survival Analysis to Customer Management Henry Stewart Briefing for Users of Marketing Analytics 4 December 2008, Mayfair Conference Centre, Marble Arch, London William De Genst

Survival Analysis

Survival Analysis Understanding Customer Attrition

Survival Analysis Techniques

Survival Analysis Distributions of lifetimes

Survival Analysis Joining Time Time Survey end Actual Time Time from common origin Distributions of lifetimes

Survival Analysis Estimation

Survival Analysis Trial contract Non-trial contract Log-rank test (Mantel-Haenszel) Chisq= 30.2 on 1 degrees of freedom, p= 3.98e-08 Estimation

Survival Analysis Cox proportional hazards model

Survival Analysis Cox proportional hazards model Var  SE(  ) z p v 1 0.09 0.03 3.19 0.01 v 2 -0.35 0.19 -1.83 0.06 v n -0.34 0.38 -0.90 0.37

Survival Analysis Schoenfeld residuals ~ time Martingale residuals ~ covariate Cox proportional hazards model

Survival Analysis Cox proportional hazards model Smoothed term

Lifetime Value Analysis Customer Lifetime Value

Lifetime Value Analysis time Survival probability Customer spend time
Marketing campaign
Initial cost
Initial return
Loyal customers spend
more over time
Return on investment
Customer Lifetime Value

Case Study Cost of a Direct Mailing Campaign

Case Study Free trials Year 1 renewal Cost of a Direct Mailing Campaign

Case Study DD cancelation Free trials going on to other products Original Payment Method

Case Study Payment method as strata
Decreased hazard:
More product switches
Method payment
Downgrading (customer finds fee unjustified for usage)
Increased income
Increased hazard:
Higher household density
Cost of a Direct Mailing Campaign coef exp(coef) se(coef) z p productswitches -0.21 0.81 0.08 -2.58 0.01 methodswitches -2.76 0.06 0.15 -17.99 0.00 downgrades -1.63 0.20 0.58 -2.80 0.01 income 0.03 1.03 0.01 1.76 0.08 HHdensity 0.06 1.06 0.03 1.95 0.05

Case Study
- Loyal customers tend to spend more over time
- Free trial customers that subsequently subscribe to a paid subscription
gradually spend more, to reach same level as paid subscribers
Paid Free trial Cost of a Direct Mailing Campaign

Case Study break-even in week 65 Cost of a Direct Mailing Campaign

Case Study Cost of a Direct Mailing Campaign

Conclusions

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Henry Stewart Survival Analysis

by andypthompson on Dec 05, 2008

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