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RS
Matrix for Customer Defections - An Example
A financial services company that provides Internet
stock trades likes to track its customers. To identify defectors,
the firm completed an RS matrix. The ranges for the sales rate
cells (i.e., purchases per period) were: less than .33 per month;
.33 per month to .5 per month; .51 to 1 per month; 1.01 per
month to 2 per month; and more than 2 per month.
Using these sales rates, the firm determined
that it would take an average of 6 months for the first group
(less than .33 per month) until the customer repurchased; 2
months for the second group; 1 month for the third group; and
less than a month for the remaining groups. The firm classified
customers' recency as one month or less; two months; three to
four months; five to six months; and more than six months. Table
RS-1 shows the RS matrix.
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