Abstract
This chapter discusses propensity models that predict the probability that a customer or lead is going to do something specific. Where segmentation sets outs the broad lines, these models are the precision instruments that allow for the identification of specific individuals. The focus of the chapter is on what a retailer can do with these models, rather than on the technical workings of such models.
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Notes
- 1.
Naturally, you should be aware that this is obviously correlated with just buying a lot, and the direction of the cause and effect of this relationship should of course be investigated. However, for the sake of example, we assume here that getting people to buy in multiple categories will indeed increase their overall spend. Note that people who have a higher spend are more likely to buy in more categories—which would of course also be true at least to a certain extent.
References
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Goldstein, D. G., Johnson, E. J., Herrmann, A., & Heitmann, M. (2008). Nudge your customers toward better choices. Harvard Business Review, 86(12), 99–105.
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Kerkhove, LP. (2022). Anticipate What Customers Will Do. In: Data-driven Retailing. Management for Professionals. Springer, Cham. https://doi.org/10.1007/978-3-031-12962-9_9
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DOI: https://doi.org/10.1007/978-3-031-12962-9_9
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