Customer Base Analysis: Partial Defection of Behaviorally-Loyal Clients in a Non-Contractual FMCG Retail Setting
W. Buckinx and
Dirk Van den Poel ()
Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration
Customer Relationship Management (CRM) enjoys increasing attention as a countermeasure to switching behaviour of customers. Because foregone profits of (partially) defected customers are significant, an increase of the retention rate can be very profitable. In this paper, we focus on the treatment of a company’s most promising customers in a non-contractual setting. We build a model in order to predict partial defection by behaviorally-loyal clients using three classification techniques: Logistic regression, ARD Neural Networks and Random Forests. Classification accuracy (PCC) and area under the receiver operating characteristic curve (AUC) are used to evaluate classifier performance. Using real-life data from an FMCG retailer we show that future partial defection can be successfully predicted. Similar to direct-marketing applications, we find that past behavioral variables, more specifically RFM variables (recency, frequency, monetary value) are the best predictors of partial customer defection.
Keywords: Marketing; Forecasting; Churn analysis; Retailing; Classification. (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
Journal Article: Customer base analysis: partial defection of behaviourally loyal clients in a non-contractual FMCG retail setting (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:03/178
Access Statistics for this paper
More papers in Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration Contact information at EDIRC.
Series data maintained by Nathalie Verhaeghe ().