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Customer Attrition Analysis For Financial Services Using Proportional Hazard Models

Dirk Van den Poel () and B. Larivière ()
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B. Larivière: -

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: This paper studies the topic of customer attrition in the context of a European financial services company. More specifically, we investigate predictors of churn incidence as part of customer relationship management (CRM). We contribute to the existing literature: (1) by combining several different types of predictors into one comprehensive retention model including several ‘new’ types of time-varying covariates related to actual customer behaviour; (2) by analysing churn behaviour based on a truly random sample of the total population using longitudinal data from a data warehouse. Our findings suggest that: (1) demographic characteristics, environmental changes and stimulating ‘interactive and continuous’ relationships with customers are of major concern when considering retention; (2) customer behaviour predictors only have a limited impact on attrition in terms of total products owned as well as the interpurchase time.

Keywords: Banking; marketing; retention modelling; proportional hazard model; Cox regression (search for similar items in EconPapers)
Pages: 45 pages
Date: 2003-01
New Economics Papers: this item is included in nep-com
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http://wps-feb.ugent.be/Papers/wp_03_164.pdf (application/pdf)

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Journal Article: Customer attrition analysis for financial services using proportional hazard models (2004) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:03/164

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