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General Information
Prof. Adrian Olaru
University Politehnica of Bucharest, Romania
I'm happy to take on the position of editor in chief of IJMO. It's a journal that shows promise of becoming a recognized journal in the area of modelling and optimization. I'll work together with the editors to help it progress.
IJMO 2014Vol.4(2): 141-145 ISSN: 2010-3697
DOI: 10.7763/IJMO.2014.V4.362

An Improved BG/NBD Approach for Modeling Purchasing Behavior Using COM-Poisson Distribution

Mohamed Ben Mzoughia and Mohamed Limam

Abstract—The concept of Customer Lifetime Value (CLV) attempts to account for the anticipated future profitability of each customer during his lifetime with the firm. In non-contractual context, in which the firm does not observe customer defection, the measurement of the CLV metric presents the challenge of choosing the appropriate model that provides satisfactory prediction of the future purchasing behavior of customers. The most prevalent models in non-contractual setting are the Pareto/NBD and the BG/NBD which are based on statistical distributions and assume that the number of transactions follows a Poisson distribution. However, many applications have an empirical distribution that does not fit a Poisson model. In this paper we propose an improved BG/NBD approach for modeling purchasing behavior using COM-Poisson Distribution, which is a generalization of the Poisson distribution to a two-parameter distribution, offering more flexibility and fitting better real world discrete data. An empirical study based on customer credit card transactions shows that the proposed model has better forecasting performance than competing models.

Index Terms—Com-Poisson, prediction, modeling, customer lifetime value.

Mohamed Limam is with Academic Affairs and Research at Dhofar University, Oman and Laboratory of Operations Research Decision and Control of Processes (LARODEC) at ISG of the University of Tunis, Tunisia (e-mail: Mohamed.limam@isg.rnu.tn).


Cite: Mohamed Ben Mzoughia and Mohamed Limam, "An Improved BG/NBD Approach for Modeling Purchasing Behavior Using COM-Poisson Distribution," International Journal of Modeling and Optimization vol. 4, no. 2, pp. 141-145, 2014.

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