Total Customer Analytics

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Customer Business Projection

Using time-series methods, Total Customer Analytics projects each customer's business with you over the next three years.  This assumes a business-as-usual approach, and you can use this information in a number of ways.  You might want to design interventions for customers at risk of attrition.  You can also use the business-as-usual forecast to change your strategy and tactics.  Lastly, you can evaluate how many new customers are needed to offset any projected business declines.  This data is appended to your customer file that is returned to you.

Specific Customer Business Projection Method

We use a multi-step method to forecast future business by customer:

  1. Estimate the customer purchase cycle.  Using invoice data, we calculate the days between invoices for each customer to compute the purchase cycle.  The purchase cycle is used to group past purchases into the cycle and subsequent purchases are forecast into the different cycles.
  2. Project future purchases.  Using optimally-scaled exponential smoothing factors, we forecast each customer's business over the forecast purchase cycle.  For customers who haven't purchased recently, our method projects no future purchases.
  3. Convert future purchases into months.  Since the purchase cycle can span multiple months and years, we smooth the purchases over time into months.
  4. Summarize data by year.  The actual and forecast data is then summarized by year and appended to the customer master file.

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