Measuring and Mitigating the Costs of Stockouts
Management Science
Measuring and Mitigating the Costs of Stockouts
Management Science
A modified Pareto/NBD approach for predicting customer lifetime value
Expert Systems with Applications: An International Journal
How to measure the effectiveness of online advertising in online marketplaces
Expert Systems with Applications: An International Journal
Expert Systems with Applications: An International Journal
Content Contributor Management and Network Effects in a UGC Environment
Marketing Science
Order postponement in a supply chain in the presence of exponential demand with gamma prior
Operations Research Letters
Nonparametric hierarchal bayesian modeling in non-contractual heterogeneous survival data
Proceedings of the 19th ACM SIGKDD international conference on Knowledge discovery and data mining
Incorporating Direct Marketing Activity into Latent Attrition Models
Marketing Science
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Today's managers are very interested in predicting the future purchasing patterns of their customers, which can then serve as an input into "lifetime value" calculations. Among the models that provide such capabilities, the Pareto/NBD "counting your customers" framework proposed by Schmittlein et al. (1987) is highly regarded. However, despite the respect it has earned, it has proven to be a difficult model to implement, particularly because of computational challenges associated with parameter estimation.We develop a new model, the beta-geometric/NBD (BG/NBD), which represents a slight variation in the behavioral "story" associated with the Pareto/NBD but is vastly easier to implement. We show, for instance, how its parameters can be obtained quite easily in Microsoft Excel. The two models yield very similar results in a wide variety of purchasing environments, leading us to suggest that the BG/NBD could be viewed as an attractive alternative to the Pareto/NBD in most applications.