Predictive Analytics for Marketers by Barry Leventhal

Author:Barry Leventhal
Language: eng
Format: epub
Publisher: Kogan Page Limited
Published: 2018-01-08T16:22:28+00:00

From testing to implementation

Steps 7, 8 and 9 of the targeting model process (Figure 6.1) cover the operational stages of putting the model into practice.

Testing the model (step 7) implies conducting a live test in order to prove that the model is effective and to quantify its effects when put into operation. This test is essential, no matter how well the model appears to discriminate or how strong its assessment results seem; the ‘acid test’ is whether it continues to work for a different time period and delivers benefits in practice. Market conditions are likely to change over time, or there may be seasonal differences, and so it is important to see that the model generalizes to be useful for more than just its development period.

In order to measure the effect, the test should compare two groups of customers – a group targeted using the model versus a control group. In order to minimize the risk to your business, the targeted group should be relatively small – just sufficiently large to be able to measure a difference in response rate with a required level of confidence. How to achieve this is discussed in Chapter 12, on testing the benefits of predictive analytics.

Implementing the targeted marketing activity (step 8) is, of course, where actual value should be delivered, in terms of either cost savings or revenue increases. By this stage, the model effectiveness has been proven, therefore the majority of contacts should be targeted using the model.

Finally, it is best practice to keep aside some customers as a control group, in order to monitor model effectiveness (step 9); however, now the control group will be relatively small – so that the financial benefits gained from the targeting are as large as possible.

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