<p>The aim of this study is to illustrate, adapt and develop methods of survival analysis in analysing and estimating customer survival time in subscription-based businesses. Two particular objectives are studied. The rst objective is to redene the existing survival analysis techniques in business terms and to discuss their uses in order to understand various issues related to the customer-rm relationship.</p>

<p>The aim of this study is to illustrate, adapt and develop methods of survival analysis in analysing and estimating customer survival time in subscription-based businesses. Two particular objectives are studied. The rst objective is to redene the existing survival analysis techniques in business terms and to discuss their uses in order to understand various issues related to the customer-rm relationship.</p>

Philosophiae Doctor - PhD / Subscription-based industries have seen a massive expansion in recent decades. In this type of industry the customer has to subscribe to be able to enjoy the service; there-fore, well-de ned start and end points of the customer relationship with the service provider are known. The length of this relationship, that is the time from subscription to service cancellation, is de ned as customer survival time. Unlike transaction-based businesses, where the emphasis is on the quality of a product and customer acquisition, subscription-based businesses focus on the customer and customer retention. A customer focus requires a new approach: managing according to customer equity (the value of a rm's customers) rather than brand equity (the value of a rm's brands). The concept of customer equity is attractive and straightforward, but the implementation and management of the customer equity approach do present some challenges. Amongst these challenges is that customer asset metric - customer lifetime value (the present value of all future pro ts generated from a customer) - depends upon assumptions about the expected survival time of the customer (Bell et al., 2002; Gupta and Lehmann, 2003). In addition, managing and valuing customers as an asset require extensive data and complex modelling. The aim of this study is to illustrate, adapt and develop methods of survival analysis in analysing and estimating customer survival time in subscription-based businesses. Two particular objectives are studied. The fi rst objective is to rede ne the existing survival analysis techniques in business terms and to discuss their uses in order to understand various issues related to the customer-fi rm relationship. The lesson to be learnt here is the ability of survival analysis techniques to extract important information on customers with regard to their loyalties, risk of cancellation of the service, and lifetime value. The ultimate outcome of this process of studying customer survival time will be to understand the dynamics and behaviour of customers with respect to their risk of cancellation, survival probability and lifetime value. The results of the estimates of customer mean survival time obtained from different nonparametric and parametric approaches; namely, the Kaplan-Meier method as well as exponential, Weibull and gamma regression models were found to vary greatly showing the importance of the assumption imposed on the distribution of the survival time. The second objective is to extrapolate the customer survival curve beyond the empirical distribution. The practical motivation for extrapolating the survival curve beyond the empirical distribution originates from two issues; that of calculating survival probabilities (retention rate) beyond the empirical data and of calculating the conditional survival probability and conditional mean survival time at a speci c point in time and for a speci c time window in the future. The survival probabilties are the main components needed to calculate customer lifetime value and thereafter customer equity. In this regard, we propose a survivor function that can be used to extrapolate the survival probabilities beyond the last observed failure time; the estimation of parameters of the newly proposed extrapolation function is based completely on the Kaplan-Meier estimate of the survival probabilities. The proposed function has shown a good mathematical accuracy. Furthermore, the standard error of the estimate of the extrapolation survival function has been derived. The function is ready to be used by business managers where the objective is to enhance customer retention and to emphasise a customer-centric approach. The extrapolation function can be applied and used beyond the customer survival time data to cover clinical trial applications. In general the survival analysis techniques were found to be valuable in understanding and managing a customer- rm relationship; yet, much still needs to be done in this area of research to make these techniques that are traditionally used in medical studies more useful and applicable in business settings. / South Africa

Prenumerationsmodellen är inget nytt fenomen, men har på senare tid spridit sig till nya branscher. Modellen har populariserats till följd av bland annat digitaliseringen, den ökade konkurrensen och nya framväxande kundvärden. Prenumerationsmodellen har fått positiv kritik för sina återkommande och förutsägbara intäkter, men för att det ska bli verklighet krävs det att kunderna stannar kvar. Flertalet prenumerationsföretag har låga utträdesbarriärer, vilket resulterar i att de kontinuerligt behöver skapa ett högt uppfattat värde för att kunderna ska stanna kvar. För att prestera väl och uppnå mål såsom att skapa ett högt uppfattat värde kan företag använda sig av prestationsmätning.Studiens syfte är att bidra med ny kunskap som förklarar hur företag med en prenumerationsmodell använder prestationsmätning i syfte att förlänga kundernas varaktighet.Studien har genomförts genom kvalitativa intervjustudier på fyra prenumerationsföretag inom olika branscher. Genom att studera likheter hos studieobjekten har slutsatser kunnat dras som kan förklara prenumerationsföretag generellt.Studien kom fram till att prenumerationsföretag, i syfte att förlänga kundernas varaktighet, använder prestationsmätning för de attribut som identifierats som särskilt värdeskapande för värdeerbjudandet. På så sätt kan prestationsmätningen användas mer optimalt för att skapa kundvärde och därmed förlänga kundernas varaktighet. Därtill fann studien att mål och mått i stor utsträckning är specifika för enskilda prenumerationsföretag. Studien fann även att värdeerbjudandet tycks påverka hur prenumerationsföretag använder sin prestationsmätning. Genom att prenumerationsföretag använder information från prestationsmätningen i syfte att agera på avvikelser, ökar deras möjlighet att förlänga kundernas varaktighet. Däremot tycks marknadsandel vara ett olämpligt mått för att besvara huruvida prenumerationsföretag skapar kundvärde och bör således inte användas i syfte att förlänga kundernas varaktighet. Slutligen fann studien att prenumerationsföretag använder en kombination av diagnostisk och interaktiv uppföljning och att det ständigt föränderliga kundvärdet innebär att uppföljningen till stor del är interaktiv.