Applications of Survival Analysis to Customer Management Henry Stewart Briefing for Users of Marketing Analytics  4 Decemb...
Survival Analysis
Survival Analysis Understanding Customer Attrition
Survival Analysis Techniques
Survival Analysis Distributions of lifetimes
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 Estimation
Survival Analysis Trial contract Non-trial contract Log-rank test (Mantel-Haenszel) Chisq= 30.2  on 1 degrees of freedom, ...
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 -...
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 <ul><li>Marketing campaign </li></ul><ul><li>Initial...
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 <ul><li>Decreased hazard: </li></ul><ul><ul><li>More product switches </li></ul></ul><...
Case Study <ul><li>- Loyal customers tend to spend more over time </li></ul><ul><li>- Free trial customers that subsequent...
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

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  • Henry Stewart Survival Analysis

    1. 1. 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
    2. 2. Survival Analysis
    3. 3. Survival Analysis Understanding Customer Attrition
    4. 4. Survival Analysis Techniques
    5. 5. Survival Analysis Distributions of lifetimes
    6. 6. Survival Analysis Distributions of lifetimes
    7. 7. Survival Analysis Joining Time Time Survey end Actual Time Time from common origin Distributions of lifetimes
    8. 8. Survival Analysis Estimation
    9. 9. Survival Analysis Estimation
    10. 10. 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
    11. 11. Survival Analysis Cox proportional hazards model
    12. 12. 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
    13. 13. Survival Analysis Schoenfeld residuals ~ time Martingale residuals ~ covariate Cox proportional hazards model
    14. 14. Survival Analysis Cox proportional hazards model Smoothed term
    15. 15. Lifetime Value Analysis Customer Lifetime Value
    16. 16. Lifetime Value Analysis time Survival probability Customer spend time <ul><li>Marketing campaign </li></ul><ul><li>Initial cost </li></ul><ul><li>Initial return </li></ul><ul><li>Loyal customers spend </li></ul><ul><li>more over time </li></ul><ul><li>Return on investment </li></ul>Customer Lifetime Value
    17. 17. Case Study Cost of a Direct Mailing Campaign
    18. 18. Case Study Free trials Year 1 renewal Cost of a Direct Mailing Campaign
    19. 19. Case Study DD cancelation Free trials going on to other products Original Payment Method
    20. 20. Case Study Payment method as strata <ul><li>Decreased hazard: </li></ul><ul><ul><li>More product switches </li></ul></ul><ul><ul><li>Method payment </li></ul></ul><ul><ul><li>Downgrading (customer finds fee unjustified for usage) </li></ul></ul><ul><ul><li>Increased income </li></ul></ul><ul><li>Increased hazard: </li></ul><ul><ul><li>Higher household density </li></ul></ul>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
    21. 21. Case Study <ul><li>- Loyal customers tend to spend more over time </li></ul><ul><li>- Free trial customers that subsequently subscribe to a paid subscription </li></ul><ul><ul><li>gradually spend more, to reach same level as paid subscribers </li></ul></ul>Paid Free trial Cost of a Direct Mailing Campaign
    22. 22. Case Study break-even in week 65 Cost of a Direct Mailing Campaign
    23. 23. Case Study Cost of a Direct Mailing Campaign
    24. 24. Conclusions

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