Best Responders Often Are the Highest Spenders

Share this content:
Tim Berry's otherwise excellent article ("Developing an Acquisition Modeling Strategy," April 20) contains a minor technical flaw. He recommends multiplying the predictions from a response model with the predictions from a prospect value model to produce a "combined score" that estimates the expected value of mailing a prospect.

Mathematically, this multiplication assumes the two predictions are independent. However, these predictions may be highly and positively correlated: Prospects most likely to respond are often the prospects most likely to spend the most.

Berry's method can fail to recognize the full value of the better prospects, perhaps scoring them into lower deciles. A simple correction known as the Durbin-McFadden factor can be applied to fix this problem (see Durbin & McFadden, Econometrica, Vol. 52, No. 2).

Applying the fix is almost trivial and could significantly improve results in large mailings. At least two catalogers now use this method at my suggestion.

Alan Rimm-Kaufman, Ph.D.

Director of marketing research

Crutchfield Corp.,

Charlottesville, VA

Next Article in Data/Analytics

Sign up to our newsletters

Company of the Week

USAData helps businesses find new customers and grow their current customers through a combination of data and digital marketing services, and easy-to-use SaaS technology products. We enrich customer data so businesses can more effectively target and communicate with customers, and connect them with their best look-alike prospects through digital and traditional channels. We make it easy through simple, self-serve applications and APIs, as well as through full-service programs managed by our Data and Digital experts. 

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above