Descriptive Data Mining by David L. Olson

Author:David L. Olson
Language: eng
Format: epub
Publisher: Springer Singapore, Singapore

Lift

Lift is the marginal difference in a segment’s proportion of response to a promotion and the average rate of response. The methodology sorts segments by probability of response, and compares cumulative response curve with average response. The basic objective of lift analysis in marketing is to identify those customers whose decisions will be influenced by marketing in a positive way. Target customers are identified as the small subset of people with marginally higher probability of purchasing.

We are probably more interested in profit, however. Lift itself does not consider profitability. We can identify the most profitable policy, but what really needs to be done is identify the portion of the population to send promotional materials to. For our purposes, we demonstrate without dollar values (which are not available), noting that the relative cost of marketing and expected profitability per segment will determine the optimal number of segments to market. The lift chart for this data is given in Fig. 4.1.

Fig. 4.1Lift for equalized data groups

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