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Business Model:

  • Customers sign up for 12 month contracts with the option to incorporate add on services (these are also contractual). If they cancel, they still pay for 12 months and their account will be terminated once their contract is completed.

Possible Solution:

  • I would like to build a Customer LTV model for this business model.
  • From my research, I've found that survival models are appropriate for this time of solution. I am a bit worried since we do not have THAT many customers (6,000) to build such a model.

Questions/Concerns:

  1. Can I still use a survival model with this userbase?
  2. Will their be any issues due the length of the contracts?
  3. Do you recommend another approach?

Any help would be much appreciated.

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  • $\begingroup$ (discrete time) Survival models sound fine. But what is the time profile..do people drop out half way through the contract or only at end of 12 months. Do customers last several years? Could you add a Kaplan Meier plot to your question $\endgroup$ – seanv507 Jan 6 at 7:10
  • $\begingroup$ People drop at random times. It's not always at the end of the contract. There are customer who last several years but we are a new company, we've only been around for 3 years. And will do $\endgroup$ – madsthaks Jan 6 at 17:08

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