Tenure is the measurement of the amount of time a person is your customer, or in other words it’s the age of a customer in your system.
For the already churned customer tenure is the difference between the time the customer was lost and the time the customer was acquired, and for existing customers tenure is the difference between the current time and the time the customer joined. We do the calculations with two example point, while assuming the current year-month is 2009-06:
|Tenure in Months||Calculation Notes:|
|132450||2008-06||2008-08||2||This customer has churned, so we only need to find the difference between the dates|
|132451||2008-06||Null||12||Since the customer hasn’t left yet, we use our chosen date.|
Some insights from Tenure
The greatest benefits from having customer tenure come from further analysis (for example hazard and survival) and population segmentation’s. One thing that comes direct from is evaluating your customer base profile as young, aging or balanced. To create this profile make a norm-ed histogram of your current customers. Here is a tenure profile of a sample customer base, what can be said about this profile? Is this customer base young, aging, or balanced?
We can see the population is young, since the majority of customers having lower tenure. In a balanced profile this is a hump or mass of users in the middle age range and/or the mass is more spread out across all the ages. In an aging customer base profile the majority of customers would have an older tenure.
Now you know how to calculate Tenure. Next time, we will dive into getting more from tenure by doing some hazard and survival analysis.