Predictive Modeling encompasses a variety of techniques to analyze current and historical facts to make predictions about future events Predictive models exploit patterns found in historical and transactional data ID: 496103
Download Presentation The PPT/PDF document "What is Predictive Modeling?" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
What is Predictive Modeling?Slide2
Predictive Modeling
encompasses a variety of techniques to analyze current and historical facts to make predictions about future events.
Predictive models
exploit patterns
found in historical and transactional data
to identify risks and opportunities. Models capture relationships among many factors to allow assessment of risk or potential associated with a particular set of conditions, guiding decision making for candidate transactions.
2
August 2011 by S. BalkanSlide3
How Harrah’s used Predictive Models
As we have seen in the Harrah’s case,
Harrah's began segmenting its customers to better target customers based on a variety of behaviors.
Harrah's uses predictive analytics technologies with its rewards program data to build customer loyalty.
SAS spotlights factors currently affecting customer behavior so Harrah's can deliver the most meaningful offers possible to its valued customers through
automated campaigns.
3
August 2011 by S. BalkanSlide4
How Predictive Models are used?
Predictive models estimate customers’ probability to respond to an offer.
Then customers in the data base are
sorted in descending order by their probability.
4
August 2011 by S. BalkanSlide5
What is a Decile?
A decile is a division of the population by their scores such that there are an equal number (one-tenth) of the subjects in each.
The Top Decile refers to the top 10% of subjects who received the highest scores by the model
A person on the 1st Model decile is more likely to respond to an offer compared to a person in the subsequent deciles
Most likely
Least likely
More profitable
Less profitable
5
August 2011 by S. BalkanSlide6
What is a Marketing Campaign?
Definition:
A specific, defined
series of activities
used in marketing a new or changed product or service, or in using new marketing channels and methods
When Predictive Models are used in selection it is called a
Targeted Campaign6August 2011 by S. BalkanSlide7
Campaign Results/New Campaign Cycle/New Models
Once the campaign results are gathered, these results are used in understanding how the models have performed and fed into the selection of the next customers in the following campaign cycle and/or used for building
more predictive models
7
August 2011 by S. BalkanSlide8
What is a dashboard?
Dashboard reports allow managers to step back from the details
and see the key trends and relationships that drive their companies
8
August 2011 by S. BalkanSlide9
What happens when managers have multiple predictive models?
Managers try to find ways to identify predictive power of multiple models to select the best model(s)
9
August 2011 by S. Balkan