Comment on “On Estimating Current-customer Equity Using Company Summary Data”

Available online at www.sciencedirect.comJournal of Interactive Marketing 25 (2011) 18–19www.elsevier.com/locate/intmarComment on “On Estimating Current-customer Equity Using CompanySummary Data”a, b⁎Peter S. Fader & Bruce G.S. HardieaWharton School of the University of Pennsylvania, 749 Huntsman Hall, 3730 Walnut Street, Philadelphia, PA 19104-6340, USAbLondon Business School, UKInthispaperPhilPfeiferpresentsanapproachforestimating tenure with the firm increases. This is routinely observed bycurrent-customerequityusingcompany-reportedsummarydata managersofsubscription-basedbusinessessuchasNetflix(whichwhen the reporting period spans multiple renewal periods. We isthefocalcompanyforPfeifer'sanalysis):“Newsubscribersaresincerelyadmireanumberofaspectsofthepaper,including:(1) actually more likely to cancel their subscriptions than olderitsfocusonaproblemofgenuinemanagerialinterest,(2)itsuse subscribers, and therefore, an increase in subscriber age helpsofa“realworld”datasetcoveringalengthyperiodoftime(and overallreductionsinchurn” (Netflix,Inc.2006).the author's decision to publish the full dataset in the paper, Unfortunately,theaggregateretentionratenumbersreportedwhichfacilitatesfuturere-analysesofit),and(3)itsaimtobring by such companies (and by Pfeifer) hide this important patternclarity (and methodological improvement) to approaches used and merely reflect a weighted average of the retention ratesin earlier papers while still retaining a highly ...