Illustrating the Performance of the NBD as a
Benchmark Model for Customer-Base Analysis
This note documents the process of implementing the NBD (as a model for customer-base analysis) in Excel. It describes how to (i) estimate the model parameters, (ii) create the expected frequency distribution of transactions given these parameter estimates, (iii) generate the aggregate sales forecast, and (iv) predict a particular customer's future purchasing, given information about his past behavior and the parameter estimates.
Note [PDF (106k)]
Associated Excel spreadsheet: [ZIP (694k)]