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Incorporating sequential information into traditional classification models by using an element/position- sensitive SAM

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Author Info

  • A. PRINZIE

    ()

  • D. VAN DEN POEL

    ()

Abstract

The inability to capture sequential patterns is a typical drawback of predictive classification methods. This caveat might be overcome by modeling sequential independent variables by sequence-analysis methods. Combining classification methods with sequenceanalysis methods enables classification models to incorporate non-time varying as well as sequential independent variables. In this paper, we precede a classification model by an element/position-sensitive Sequence-Alignment Method (SAM) followed by the asymmetric, disjoint Taylor-Butina clustering algorithm with the aim to distinguish clusters with respect to the sequential dimension. We illustrate this procedure on a customer-attrition model as a decisionsupport system for customer retention of an International Financial-Services Provider (IFSP). The binary customer-churn classification model following the new approach significantly outperforms an attrition model which incorporates the sequential information directly into the classification method.

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File URL: http://www.feb.ugent.be/nl/Ondz/wp/Papers/wp_05_292.pdf
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Bibliographic Info

Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 05/292.

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Length: 36 pages
Date of creation: Feb 2005
Date of revision:
Handle: RePEc:rug:rugwps:05/292

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Related research

Keywords: sequence analysis; binary classification methods; Sequence-Alignment Method; asymmetric clustering; customer-relationship management; churn analysis;

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References

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  1. Van den Poel, Dirk & Lariviere, Bart, 2004. "Customer attrition analysis for financial services using proportional hazard models," European Journal of Operational Research, Elsevier, vol. 157(1), pages 196-217, August.
  2. B. Larivière & D. Van Den Poel, 2004. "Investigating the role of product features in preventing customer churn, by using survival analysis and choice modeling: The case of financial services," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/223, Ghent University, Faculty of Economics and Business Administration.
  3. Toth, Paolo & Vigo, Daniele, 1999. "A heuristic algorithm for the symmetric and asymmetric vehicle routing problems with backhauls," European Journal of Operational Research, Elsevier, vol. 113(3), pages 528-543, March.
  4. Raj Sethuraman & V. Srinivasan & Doyle Kim, 1999. "Asymmetric and Neighborhood Cross-Price Effects: Some Empirical Generalizations," Marketing Science, INFORMS, vol. 18(1), pages 23-41.
  5. W. Buckinx & E. Moons & D. Van Den Poel & G. Wets, 2003. "Customer-Adapted Coupon Targeting Using Feature Selection," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/201, Ghent University, Faculty of Economics and Business Administration.
  6. Prinzie, Anita & Van den Poel, Dirk, 2006. "Investigating purchasing-sequence patterns for financial services using Markov, MTD and MTDg models," European Journal of Operational Research, Elsevier, vol. 170(3), pages 710-734, May.
  7. W C Wilson, 1998. "Activity pattern analysis by means of sequence-alignment methods," Environment and Planning A, Pion Ltd, London, vol. 30(6), pages 1017-1038, June.
  8. Glen L. Urban & Philip L. Johnson & John R. Hauser, 1984. "Testing Competitive Market Structures," Marketing Science, INFORMS, vol. 3(2), pages 83-112.
  9. B. Baesens & G. Verstraeten & D. Van Den Poel & M. Egmont-Petersen & P. Van Kenhove & J. Vanthienen, 2002. "Bayesian Network Classifiers for Identifying the Slope of the Customer - Lifecycle of Long-Life Customers," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 02/154, Ghent University, Faculty of Economics and Business Administration.
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Citations

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Cited by:
  1. V. L. Miguéis & D. Van Den Poel & A.S. Camanho & J. Falcao E Cunha, 2012. "Modeling Partial Customer Churn: On the Value of First Product-Category Purchase Sequences," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/790, Ghent University, Faculty of Economics and Business Administration.
  2. J. Burez & D. Van Den Poel, 2005. "CRM at a Pay-TV Company: Using Analytical Models to Reduce Customer Attrition by Targeted Marketing for Subscription Services," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/348, Ghent University, Faculty of Economics and Business Administration.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Aliñamento de secuencias in Wikipedia Galician ne '')
  2. Customer attrition in Wikipedia English ne '')
  3. 聚类分析 in Wikipedia Chinese ne '')
  4. Sequence alignment in Wikipedia English ne '')
  5. User:Webridge/我的沙盘/2 in Wikipedia Chinese ne '')
  6. Dizi hizalaması in Wikipedia Turkish ne '')
  7. Alineamiento de secuencias in Wikipedia Spanish ne '')

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