BG {foretell}

Beta Geometric (BG) Model for Projecting Customer Retention.

Description

BG is a beta geometric model implemented based on Fader and Hardie probability based projection methedology. The survivor function for BG is

Beta(a,b+t)/Beta(a,b)

Usage

BG(surv_value, h, lower = c(0.001, 0.001))

Arguments

surv_value

a numeric vector of historical customer retention percentage should start at 100 and non-starting values should be between 0 and less than 100

h

forecasting horizon

lower

lower limit used in R optim rotuine. Default is c(1e-3,1e-3).

Value

fitted:

Fitted values based on historical data

projected:

Projected h values based on historical data

max.likelihood:

Maximum Likelihood of Beta Geometric

params - a, b:

Returns a and b paramters from maximum likelihood estimation for beta distribution

References

Fader P, Hardie B. How to project customer retention. Journal of Interactive Marketing. 2007;21(1):76-90.

Examples

surv_value <- c(100,86.9,74.3,65.3,59.3)
h <- 6
BG(surv_value,h)