The Predictive Modeling Process
The third cornerstone of database marketing (the other two being LTV and testing) is predictive modeling. Predictive modeling is the use of statistical methods to predict customer behavior — e.g., will the customer respond to this offer or catalog? Will the customer churn in the next 2 months? Which product in our product line would be most attractive to the customer? Which sales channel will the customer use if we send the customer an email? Predictive modeling first and foremost is a process, consisting of defining the problem, preparing the data, estimating the model, evaluating the model, and selecting customers to target.We discuss the process in depth, and conclude with a review of some important long-term considerations related to predictive modeling.
KeywordsPredictive Modeling Loyal Customer Customer Characteristic Fico Score Predictive Modeling Process
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