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A Cointegration Model with Structure Breaks for Customer Migration Analysis

Author

Listed:
  • Wei Jiang

    (Antai College of Economics and Management, Shanghai Jiaotong University, 200240 Shanghai, China)

  • Rong Duan

    (AT&T Labs, Florham Park, New Jersey 07932)

  • Siu-Tong Au

    (AT&T Labs, Florham Park, New Jersey 07932)

Abstract

As new technologies, products, and services emerge, consumers actively or passively migrate from legacy products to new substitutes while enjoying the adventures and benefits of the new everyday technology. However, identifying customers who migrate presents a challenge for service providers in understanding customer needs and business trends. This paper proposes a cointegrated linear regression model with structure breaks for customer migration analysis. The purpose of the cointegration model is to extract important cause-effect relationships for the migrations. The unique characteristic of the proposed cointegration model encompasses structure breaks that represent significant changes of the relationship among multiple data streams of customer activities. The proposed method can help marketing researchers identify migration customers, better understand customer needs, and evaluate their business impacts so that corresponding marketing campaigns can be initiated. An example in the telecommunications industry is discussed to demonstrate the application of the proposed method for migration analysis.

Suggested Citation

  • Wei Jiang & Rong Duan & Siu-Tong Au, 2012. "A Cointegration Model with Structure Breaks for Customer Migration Analysis," Service Science, INFORMS, vol. 4(1), pages 42-54, March.
    • Handle: RePEc:inm:orserv:v:4:y:2012:i:1:p:42-54
    DOI: 10.1287/serv.1110.0003
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