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

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  • 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.

Suggested Citation

  • A. Prinzie & D. Van Den Poel, 2005. "Incorporating sequential information into traditional classification models by using an element/position- sensitive SAM," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/292, Ghent University, Faculty of Economics and Business Administration.
  • Handle: RePEc:rug:rugwps:05/292
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    File URL: http://wps-feb.ugent.be/Papers/wp_05_292.pdf
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    References listed on IDEAS

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    1. Baesens, Bart & Verstraeten, Geert & Van den Poel, Dirk & Egmont-Petersen, Michael & Van Kenhove, Patrick & Vanthienen, Jan, 2004. "Bayesian network classifiers for identifying the slope of the customer lifecycle of long-life customers," European Journal of Operational Research, Elsevier, vol. 156(2), pages 508-523, July.
    2. W C Wilson, 1998. "Activity Pattern Analysis by Means of Sequence-Alignment Methods," Environment and Planning A, , vol. 30(6), pages 1017-1038, June.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. Glen L. Urban & Philip L. Johnson & John R. Hauser, 1984. "Testing Competitive Market Structures," Marketing Science, INFORMS, vol. 3(2), pages 83-112.
    8. 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.
    9. 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.
    10. 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.
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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.

    More about this item

    Keywords

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

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    1. Alineamiento de secuencias in Wikipedia Spanish ne '')
    2. 聚类分析 in Wikipedia Chinese ne '')
    3. Aliñamento de secuencias in Wikipedia Galician ne '')
    4. User:Webridge/我的沙盘/2 in Wikipedia Chinese ne '')
    5. Dizi hizalaması in Wikipedia Turkish ne '')
    6. Customer attrition in Wikipedia English ne '')
    7. Sequence alignment in Wikipedia English ne '')

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