IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Customer Base Analysis: An Industrial Purchase Process Application

Listed author(s):
  • David C. Schmittlein

    (University of Pennsylvania)

  • Robert A. Peterson

    (University of Texas at Austin)

Registered author(s):

    Customer base analysis is concerned with using the observed past purchase behavior of customers to understand their current and likely future purchase patterns. More specifically, as developed in Schmittlein et al. (1987), customer base analysis uses data on the frequency, timing, and dollar value of each customer's past purchases to infer • the number of customers currently active, • how that number has changed over time, • which individual customers are most likely still active, • how much longer each is likely to remain an active customer, and • how many purchases can be expected from each during any future time period of interest. In this paper we empirically validate the model proposed by Schmittlein et al. In doing so, we provide one of the few applications of stochastic models to industrial purchase processes and industrial marketing decisions. Besides showing that the model does capture key aspects of the purchase process, we also present a more effective parameter estimation method and some results regarding sampling properties of the parameter estimates. Finally, we extend the model to explicitly incorporate dollar volume of past purchases. Our results indicate that this kind of customer base analysis can be both effective in predicting purchase patterns and in generating insights into how key customer groups differ. The link of both these benefits to industrial marketing decision making is also discussed.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Article provided by INFORMS in its journal Marketing Science.

    Volume (Year): 13 (1994)
    Issue (Month): 1 ()
    Pages: 41-67

    in new window

    Handle: RePEc:inm:ormksc:v:13:y:1994:i:1:p:41-67
    Contact details of provider: Postal:
    7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA

    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:inm:ormksc:v:13:y:1994:i:1:p:41-67. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.