AI and Analytics for Business


Are Your Customers Clumpy?

If you’ve ever spent a weekend binge-watching a season of “Breaking Bad” or some other series on streaming video, you can take comfort in the fact that you’re certainly not alone. Whole sections of the population are consuming digital products and services in a “clumping” pattern that features extended periods of inactivity punctuated by short, intense buying bursts.

Once marketers realize this — and they already have the data in hand to track it — they could mine a rich, new digital behavior vein, says Wharton marketing professor Eric Bradlow. He notes that a basic customer value measure for decades has been RFM segmentation (recency, frequency and monetary value). “My research … says that’s not a complete characterization…,” he adds. One more letter is needed: “I call that ‘C,’ which [stands for] clumpiness.” Bradlow explains that concept in this Knowledge@Wharton interview, based on a research paper titled “New Measures of Clumpiness for Incidence Data,” which he co-authored with Yao Zhang, an associate at Credit Suisse, and Dylan Small, a Wharton statistics professor.