Calculating probability of churn in year 2 and year 3

harsh0404 — Mon, 20 Aug 2018 16:24:55 GMT

I am trying to find customer future value. I am using a very simple formula here. cfv for year 1 = yearly gross margin or profit * probability of retention. Now if I want to find cfv for year 2, then its the same formula but I want to find out probability of retention of customer in year 2. How do I do it?
I could assume probability of retention is constant but in my survival analysis it follows a non linear curve. So its definitely not constant. Most customers drop by year 1, 2 , 3 and then it becomes constant.
Here my target variable is if customer churned or not. I got probability of retention from modelling results.

Re: Calculating probability of churn in year 2 and year 3

Reeza — Mon, 20 Aug 2018 14:51:13 GMT

Wouldn't you get the retention (survival/failure rate) from your survival analysis and apply it to your data? PROC LIFETEST or PROC PHREG can give you the survival rates depending on the complexity of the model.

A lot of this depends on your data structure so if you show what you have and what you've done so far, we can probably recommend the next steps from there.

@harsh0404 wrote:

I am trying to find customer future value. I am using a very simple formula here. cfv for year 1 = yearly gross margin or profit * probability of retention. Now if I want to find cfv for year 2, then its the same formula but I want to find out probability of customer in year 2. How do I do it?
I could assume probability of retention is constant but in my survival analysis it follows a non linear curve. So its definitely not constant. Most customers drop by year 1, 2 , 3 and then it becomes constant.
Here my target variable is if customer churned or not. I got probability of retention from modelling results.

topic Calculating probability of churn in year 2 and year 3 in SAS Data Science

Calculating probability of churn in year 2 and year 3

Re: Calculating probability of churn in year 2 and year 3