Dead Reckoning: Counting Your Customers Who Never Say Goodbye
Why companies can't really know how many customers they still have
When customers stop buying without announcement, companies use statistical models to guess who's still active. But the paper shows these models are fundamentally unreliable: different reasonable assumptions produce customer counts that vary by a factor of 7.6 on the same dataset, even when predictions about near-term purchases match closely. The problem isn't bad math—it's that the models extrapolate infinitely far into the future, where verification is impossible.
Companies use these customer counts for valuation, marketing budgets, and strategic decisions worth millions of dollars. When the same data can justify counts ranging from 3,654 to 27,734 active customers, leadership is making bets on a number with almost no reliable foundation. The paper shows the honest fix: report concrete, verifiable predictions over a fixed time horizon (like "18-month repeat purchase rate") instead of an extrapolated infinity, and if a total count must be given, present it as a wide range rather than false precision.