Why Invest in Predictive Models?

… the process of discovering meaningful new correlations, patterns and trends by sifting through large amounts of data stored in repositories, using pattern recognition technologies as well as statistical and mathematical techniques.”
Gartner Group

The accuracy of any predictive model is based on the accuracy of the data.  Even when the data is very clean the models have a fair amount of false positives and misdiagnosed cases.  If this is true then does it make sense to invest in these models?

prescriptiveThe crazy answer is YES.  It can narrow down the segment to which actionable tasks are to be actioned. This yields better quality results per action taken and also put precious limited time and energy into the right places instead of spending energy and resources where the outcome will almost have an unfavorable, predicable outcome.  If the outcome is not driving the objective set then that segment should be ignored. The key to success is not doing more but knowing which tasks to do and which tasks need to be ignored.  Peter Druker said “What is important is knowing what is important”.

There’s no “100% right” answer, There’s just different levels of “right”…
the idea here is to help make better use of data that is already there and make more meaningful and proactive sense of new data coming in so it can be acted up in a timely basis. It is important now to engage in this data discipline since the trend is that the data volumes are only growing and we need to focus pass all the data noise.  There is benefits to be derived if we do.
Significantly increase ROI through segment reduction:
  1. Lower campaign costs by targeting those most likely to have impact
  2. Increase response rate by targeting segments specifically on attributes that matter to the objective
  3. Increase overall impact by not hassling loyal customers where the interaction will have little changes outcome

PS.  the irony is sometimes you never know if you omitted a potential lead that was marked false by the model but the quality trade off can be worth it?

 Stephen Choo Quan
Stephen is both a SAP business objects certified architect as well as being a certified IBM DB2 Database Developer. read More…