Hi All
I am trying to work out a probabilty equation that shows an annualised
quantity in regards to Customers churning away from a business.
I have said the following
p1 - probabililty of a customer with 1 month tenure churning away
p2 - probabililty of a customer with 2 month tenure churning away
p3 - probabililty of a customer with 3 month tenure churning away
.
.
p12 - probabililty of a customer with 12 month tenure churning away
pr - > 1 year
Customer base
m1 - customers with 1 month tenure
m2 - customers with 2 month tenure
m3 - customers with 3 month tenure
..
..
m12 - customers with 12 month tenure
mr - customers with >12 month tenure
My equation consists so far of this
P1 is the number churning away after 1 month
P1 = m1p1 +m2p2 + .......+mrpr
P2 is the number churning away after 2 month
P2 = m1(1-p1)p2 +m2(1-p2)p3 + ...
Am I on the right track. Please assist??
Thanks
Kevin Elhassan
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