Abstract
A new metric of the quality of a savings product, from the perspective of a bank, is introduced. This is the stickiness of a dollar, the average time a random deposited dollar remains with the bank. A practical algorithm for calculating stickiness is deduced and theoretical properties of the metric are derived. Stickiness is a metric that can be applied both at the aggregate and at the individual level. Examples are given from a bank with branches in different countries. With these examples it is shown that stickiness has some desirable properties: (1) stickiness at the individual level positively correlates with stickiness at the aggregate level; (2) stickiness increases with time, but slower than at a linear rate and (3) at the individual level stickiness in the future can be predicted by stickiness in the past. As a consequence, stickiness can be regarded as a stable customer variable. It is, therefore sensible to characterize demographic groups, e.g. stickiness increases with age, and to use it as active or descriptive variable for customer segments. An example is given of a new product that is relatively sticky.
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2has a background in Economic Psychology (PhD). He worked at the research departments of ING Bank and Rabobank International. Currently he is Manager Consumer Intelligence at RTL – RTL is a leading media and entertainment company and Europe’s largest broadcaster. With his background in Psychology he is interested in people’s behaviour and thinking.
Appendix
Appendix
Proof of Theorem 1
We prove the theorem by induction with respect to the moments of change (deposit or withdrawal) t0,t1, …,t n , tn+1. The time a random deposit remains on the account between t0 and t n we denote by τ n . Its expected value is Eτ n . Denote by An, n+1 the area below the balance between t n and tn+1, A n =A0, n. For n=1 the theorem holds as A1=D1*(t1−t0), A1/D1=t1−t0, the time the first deposit has remained on the account. Now assume that the theorem holds up to n: Eτ n =A n /D n . Now there are two possibilities:
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1)
at t n a deposit d n is added to the account balance
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2)
at t n a withdrawal w n is subtracted from the account balance
In Situation (2), where there is no deposit at t n , Dn+1=D n
Formally, the proof only pertains to the moments of change, but it is easily expanded to arbitrary moments.
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Sikkel, D., van Meer, G. Stickiness: The value of saved money. J Market Anal 3, 147–158 (2015). https://doi.org/10.1057/jma.2015.13
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DOI: https://doi.org/10.1057/jma.2015.13