Data Analysis Using SQL and Excel, 2nd Edition

CHAPTER 7 Factors Affecting Survival: The What and Why of Customer Tenure

 

The previous chapter demonstrated the value of survival analysis for understanding customers and their stop behaviors. It introduced empirical hazards estimation, which calculates a separate hazard probability for each tenure. It included several examples and extensions showing how to apply survival analysis to some business problems, including customer value and forecasting the number of active customers in the future.

This chapter builds on this foundation by introducing three extensions to basic survival analysis. These extensions solve common, real-world problems. They also make it possible to understand the effects of other factors besides tenure on survival.

The first extension focuses on factors other than tenure that affect survival. A big complication here is that the effect may vary, depending on tenure. For instance, customers in Gotham and Metropolis have about the same survival for the first year. Around the one-year anniversary, Gotham customers start leaving at a much faster rate. In other words, the effect of market on survival varies by tenure.

The most prominent statistical technique in this area, Cox proportional hazards regression, assumes that the effects do not change over time. Although this method is outside the scope of this book, it does inspire us to look at the changing effects of each factor at different tenures. This chapter explains several different approaches for understanding ...