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Customer attrition analysis for financial services using proportional hazard models

  • Van den Poel, Dirk
  • Lariviere, Bart

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.

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Article provided by Elsevier in its journal European Journal of Operational Research.

Volume (Year): 157 (2004)
Issue (Month): 1 (August)
Pages: 196-217

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Handle: RePEc:eee:ejores:v:157:y:2004:i:1:p:196-217
Contact details of provider: Web page: http://www.elsevier.com/locate/eor

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