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Predicting Customer Profitability During Acquisition: Finding the Optimal Combination of Data Source and Data Mining Technique

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Author Info

  • J. D’HAEN
  • D. VAN DEN POEL

    ()

  • D. THORLEUCHTER

Abstract

The customer acquisition process is generally a stressful undertaking for sales representatives. Luckily there are models that assist them in selecting the ‘right’ leads to pursue. Two factors play a role in this process: the probability of converting into a customer and the profitability once the lead is in fact a customer. This paper focuses on the latter. It makes two main contributions to the existing literature. Firstly, it investigates the predictive performance of two types of data: web data and commercially available data. The aim is to find out which of these two have the highest accuracy as input predictor for profitability and to research if they improve accuracy even more when combined. Secondly, the predictive performance of different data mining techniques is investigated. Results show that bagged decision trees are consistently higher in accuracy. Web data is better in predicting profitability than commercial data, but combining both is even better. The added value of commercial data is, although statistically significant, fairly limited.

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Bibliographic Info

Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 12/818.

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Length: 12 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:rug:rugwps:12/818

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Related research

Keywords: marketing analytics; predictive analytics; data source; b2b; web mining; web crawling; bagging; profitability; customer acquisition; external commercial data;

This paper has been announced in the following NEP Reports:

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  1. K. Coussement & D. Van Den Poel, 2008. "Improving Customer Attrition Prediction by Integrating Emotions from Client/Company Interaction Emails and Evaluating Multiple Classifiers," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 08/527, Ghent University, Faculty of Economics and Business Administration.
  2. Petersen, Maya L. & Molinaro, Annette M. & Sinisi, Sandra E. & van der Laan, Mark J., 2007. "Cross-validated bagged learning," Journal of Multivariate Analysis, Elsevier, vol. 98(9), pages 1693-1704, October.
  3. W.R Buckinx & D. Van Den Poel, 2003. "Predicting Online Purchasing Behavior," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/195, Ghent University, Faculty of Economics and Business Administration.
  4. D. Thorleuchter & D. Van Den Poel & A. Prinzie, 2011. "Analyzing existing customers’ websites to improve the customer acquisition process as well as the profitability prediction in B-to-B marketing," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/733, Ghent University, Faculty of Economics and Business Administration.
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