Account Attrition, Survivor Curves, and Customer Relationship Valuation

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American Society of Appraisers Business Valuation Review™
Winter 2010 Volume 29, Issue 4 pp. 152-159
Richard K. Ellsworth, PE, ASA

Summary

Customer relationship populations are aggregated from individual customer accounts with statistical procedures founded in actuarial science used to numerically portray customer retirement behavior. Customer account life expectancy is described as a survivor curve that explains the pattern of customer relationship decline for a population. The customer relationship valuation process necessitates the separation of the actuarial life characteristics from the economic attributes of the customer relationship population with the application of a discounted cash flow analysis.
Account Attrition, Survivor Curves, and Customer Relationship Valuation
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