Metrics 5.3 Question Help Estimating if a Customer is Active For marketers who have customers with contracts (like a cell phone company), it is generally easy to understand if a customer has defected - the customer either formally quits their contract, decides not to renew their contract, or the customer stops paying their monthly bill. Four customers have been selected from your CRM database. Based on their purchase activity with your company, calculate the probability they will be active in an upcoming period. Based on this estimate, which customer is most likely to be active in the time period? Click the icon to view the purchase activity table. i Click the icon to view the additional information. Based on our estimate, customer with the probability of customer being active % is most likely to be active in the time period. (Round to one decimal place.) i More Info Customer ID Number of months in observation period Time period of most recent purchase Number of purchases in observation period Time period for calculating whether customer will be active 12 12 12 12 Customer A Customer B Customer C Customer D 10 10 10 10 4 8 8 7 1 1 2 1 Print Done x ming pe i More Info Understanding if a customer is active or inactive is a trickier proposition for marketers who have customers who are not required to have contracts. For example, clothing stores and grocery stores do not require customers pay a recurring monthly charge. Marketing researchers have found one simple equation that tends to be useful for calculating the probability (% chance) a customer will be active (make a purchase) in a future time period. It is: Probability of a customer being active = D)" . where T = time period of the most recent purchase, N = current time period for which the marketer wishes to calculate the probability of the customer being active, n=number of purchases made in the observation period. Print Done