Communications for Statistical Applications and Methods

The Korean Statistical Society (한국통계학회)
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Prediction of the Probability of Customer Attrition by Using Cox Regression

  • Kang, Hyuncheol (Department of Informational Statistics, Hoseo University) ;
  • Han, Sang-Tae (Department of Informational Statistics, Hoseo University)
  • Published : 2004.08.01
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Abstract

This paper presents our work on constructing a model that is intended to predict the probability of attrition at specified points in time among customers of an insurance company. There are some difficulties in building a data-based model because a data set may contain possibly censored observations. In an effort to avoid such kind of problem, we performed logistic regression over specified time intervals while using explanatory variables to construct the proposed model. Then, we developed a Cox-type regression model for estimating the probability of attrition over a specified period of time using time-dependent explanatory variables subject to changes in value over the course of the observations.

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