Counting Your Customers: Who-Are They and What Will They Do Next?

David C. Schmittlein, Donald G. Morrison and Richard Colombo
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David C. Schmittlein: The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104
Donald G. Morrison: Graduate School of Business, Columbia University, New York, New York 10027
Richard Colombo: Department of Marketing, Tisch Hall, New York University, New York, New York 10002

Management Science, 1987, vol. 33, issue 1, 1-24

Abstract: This article is concerned with counting and identifying those customers who are still active. The issue is important in at least three settings: monitoring the size and growth rate of a firm's ongoing customer base, evaluating a new product's success based on the pattern of trial and repeat purchases, and targeting a subgroup of customers for advertising and promotions. We develop a model based on the number and timing of the customers' previous transactions. This approach allows computation of the probability that any particular customer is still active. Several numerical examples are used to illustrate applications of the model.

Keywords: marketing; consumer behavior; poisson process; probability mixture models; new product introductions; market segmentation; brokerage firms (search for similar items in EconPapers)
Date: 1987
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