Uplift Modeling - The lamp in the dark

As I mentioned in my last post, Uplift modeling is a new age technique to help the marketing team save money, drive positive ROI and ensure successful campaigns by controlling the target audience or respondents of the campaigns.

Uplift model will plan strategy on the hold out recommendation and drive positive incremental response. This technique has a multi-aspect approach. The population base is split into a four blocker as shown in the picture:

The algorithm developed will try to split the data into four groups based on their response to the marketing activity. The effect of the treatment will be measured using this segmentation. These groups shall be individually classified by sophisticated data mining algorithms to form equations which could be thus used to create futuristic marketing strategy encompassing identification of the target audience, setting up of measurement framework i.e. the control group, optimization of the marketing budget by selection of target audience which would be comprising of the responders to the campaigns.

As seen in the picture above, marketing team would like to target persuadable or savable audience alone. Based on the price of each piece of marketing, budget optimization can be done. This will account to savings from implementation of the model.

Impact of multiple independent variables coming from purchase pattern behavior and other external data impacting the stickiness of the customer to the brand can be taken into account. In fact, the algorithm self corrects and every time new factors get incorporated, they get accounted as per their statistical significance.

The approach is unique as it combines Bayesian networks and Random forest for prediction. Both the techniques are unparalleled in accuracy and sophistication.

  

The inherent responders would be sieved out from the group of responders who converged due to the impact of the marketing activity. This approach would also help us to stop targeting the customer groups who respond negatively to any marketing activity. Also, this will minimize random targeting which could negatively impact the Dell brand value.

I shall talk in detail about both these techniques soon. So keep reading !!