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Statistical Methods in Customer Relationship Management by J. Andrew Petersen, V. Kumar

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3.4 Duration/Time

In contractual settings, the time customers spent with a company is critical to the maintenance and development of a business. Lewis [4] argued that customer acquisition promotions influence the duration of customer–company relationships. In the newspaper subscription industry, the author used survival analysis to model the relationship between discount depth and the length of time as a subscriber. The author adopted accelerated failure time models (Kalbfleish and Prentice, 1980) estimated as shown in the following specification:

(3.22) equation

where img is a random disturbance term, img and img are the discount and discount squared, and img and img are parameters to be estimated. The author varied the restrictions on img and and specified various forms of the hazard function. The author used the ...

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