"Counting Your Customers" One by One: A Hierarchical Bayes Extension to the Pareto/NBD Model

  title={"Counting Your Customers" One by One: A Hierarchical Bayes Extension to the Pareto/NBD Model},
  author={Makoto Abe},
  journal={Marketing Science},
This research extends a Pareto/NBD model of customer-base analysis using a hierarchical Bayesian (HB) framework to suit today’s customized marketing. The proposed HB model presumes three tried and tested assumptions of Pareto/NBD models: (1) a Poisson purchase process, (2) a memoryless dropout process (i.e., constant hazard rate), and (3) heterogeneity across customers, while relaxing the independence assumption of the purchase and dropout rates and incorporating customer characteristics as… CONTINUE READING
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