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Data Augmentation by Predicting Spending Pleasure Using Commercially Available External Data

Author

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  • P. BAECKE
  • D. VAN DEN POEL

Abstract

Since customer relationship management (CRM) plays an increasingly important role in a company’s marketing strategy, the database of the company can be considered as a valuable asset to compete with others. Consequently, companies constantly try to augment their database through data collection themselves, as well as through the acquisition of commercially available external data. Until now, little research has been done on the usefulness of these commercially available external databases for CRM. This study will present a methodology for such external data vendors based on random forests predictive modeling techniques to create commercial variables that solve the shortcomings of a classic transactional database. Eventually, we predicted spending pleasure variables, a composite measure of purchase behavior and attitude, in 26 product categories for more than 3 million respondents. Enhancing a company’s transactional database with these variables can significantly improve the predictive performance of existing CRM models. This has been demonstrated in a case study with a magazine publisher for which prospects needed to be identified for new customer acquisition.

Suggested Citation

  • P. Baecke & D. Van Den Poel, 2009. "Data Augmentation by Predicting Spending Pleasure Using Commercially Available External Data," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 09/596, Ghent University, Faculty of Economics and Business Administration.
    • Handle: RePEc:rug:rugwps:09/596
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    Citations

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    Cited by:

    1. M. Ballings & D. Van Den Poel & E. Verhagen, 2013. "Evaluating the Added Value of Pictorial Data for Customer Churn Prediction," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 13/869, Ghent University, Faculty of Economics and Business Administration.
    2. P. Baecke & D. Van Den Poel, 2012. "Including Spatial Interdependence in Customer Acquisition Models: a Cross-Category Comparison," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/788, Ghent University, Faculty of Economics and Business Administration.
    3. Philippe Baecke & Dirk Van Den Poel, 2010. "Improving Purchasing Behavior Predictions By Data Augmentation With Situational Variables," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 9(06), pages 853-872.
    4. M. Ballings & D. Van Den Poel, 2012. "Kernel Factory: An Ensemble of Kernel Machines," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/825, Ghent University, Faculty of Economics and Business Administration.
    5. P. Baecke & D. Van Den Poel, 2012. "Improving Customer Acquisition Models by Incorporating Spatial Autocorrelation at Different Levels of Granularity," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/819, Ghent University, Faculty of Economics and Business Administration.
    6. J. D’Haen & D. Van Den Poel & D. Thorleuchter, 2012. "Predicting Customer Profitability During Acquisition: Finding the Optimal Combination of Data Source and Data Mining Technique," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/818, Ghent University, Faculty of Economics and Business Administration.
    7. M. Ballings & D. Van Den Poel, 2012. "The Relevant Length of Customer Event History for Churn Prediction: How long is long enough?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/804, Ghent University, Faculty of Economics and Business Administration.
    8. J. D’Haen & D. Van Den Poel, 2013. "Model-supported business-to-business prospect prediction based on an iterative customer acquisition framework," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 13/863, Ghent University, Faculty of Economics and Business Administration.
    9. 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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