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In our business of selling fixer-upper homes online, we want to improve our efficiency in
customer acquisition. Our data has proven to be effective at differentiating between
customers and non-customers. We will find which variables are the best predictors in
finding a customer, how each variable effects an individual’s likelihood of being a
customer and by how much.
The most important predictors when predicting if an individual looks like a customer or
not is real estate investment, femaleness, and if they own a home. We can see how
effective this variable is at differentiating a response that looks like a customer from just
the average response. For example, customers are close to 80% more likely to invest in
real estate than non-customers. Customers are 23% more likely than average to be
male. These things are important to know when finding what kind of people we want to
target.
We use these variables to see what kind of activities our customers do and what profiles
they usually have. When we look at these activities and add them all together to find
what our customers look like, we are using a multivariate solution.
EDEN HANSING PAGE 02
We score a set of known customers and non-customers with the scorecard above and then rank them
from the highest (most similar to our customers) to lowest scores. Then, we group these people into
ten equal-sized deciles.