henry stewart survival analysis

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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

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  • 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. Survival Analysis
  • 3. Survival Analysis Understanding Customer Attrition
  • 4. Survival Analysis Techniques
  • 5. Survival Analysis Distributions of lifetimes
  • 6. Survival Analysis Distributions of lifetimes
  • 7. Survival Analysis Joining Time Time Survey end Actual Time Time from common origin Distributions of lifetimes
  • 8. Survival Analysis Estimation
  • 9. Survival Analysis Estimation
  • 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. Survival Analysis Cox proportional hazards model
  • 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. Survival Analysis Schoenfeld residuals ~ time Martingale residuals ~ covariate Cox proportional hazards model
  • 14. Survival Analysis Cox proportional hazards model Smoothed term
  • 15. Lifetime Value Analysis Customer Lifetime Value
  • 16. 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
  • 17. Case Study Cost of a Direct Mailing Campaign
  • 18. Case Study Free trials Year 1 renewal Cost of a Direct Mailing Campaign
  • 19. Case Study DD cancelation Free trials going on to other products Original Payment Method
  • 20. 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
  • 21. 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
  • 22. Case Study break-even in week 65 Cost of a Direct Mailing Campaign
  • 23. Case Study Cost of a Direct Mailing Campaign
  • 24. Conclusions