February 08, 2012

Calculating Judy

Recall our weighting strategy from yesterday, as it relates to channels:
  • Mail Orders = Weight of 0.00.
  • Telephone Orders = Weight of 0.15.
  • Online Orders Matched Back to a Catalog = Weight of 0.30.
  • Search Orders Matched Back to a Catalog = Weight of 0.40.
  • Email Orders Matched Back to a Catalog = Weight of 0.50.
  • Pure Search Orders = Weight of 0.60.
  • Pure Email Orders = Weight of 0.70.
  • Online Advertising Orders, No Offline Interaction = Weight of 0.75.
  • Pure Online Orders = Weight of 0.80.
  • Mobile, Social, Flash Sales Orders = Weight of 1.00.
We'll use this rule for categorizing customers as Judy, Jennifer, and Jasmine:
  • Net Weighting of 0.000 to 0.333 = Judy.
  • Net Weighting of 0.334 to 0.667 = Jennifer.
  • Net Weighting of 0.667 to 1.000 = Jasmine.
Here's an example for Judy.  She placed one order in the past year, for $100, over the telephone.  Her net weighting is:
  • ($100) * (1.00 for 0-12 month orders) * (0.15 for Telephone Orders) / ($100) * (1.00 for 0-12 month orders) = 0.15.  Because 0.15 is between 0.000 and 0.333, this customer is a "Judy".
Here's another example for Judy.  She spent $100 13-24 months ago via the telephone, and she spent $100 yesterday via an online order matched back to a catalog.  The order from 13-24 months ago gets a weight of 0.50, the order from 0-12 months ago gets a weight of 1.00.  The phone order gets a weight of 0.15, the online order matched back to a catalog gets a weight of 0.30.  Her net weighting is:
  • ($100 * 0.50 * 0.15 + $100 * 1.00 * 0.30) / ($100 * 0.50 + $100 * 1.00) = 0.250.  Because 0.250 is between 0.000 and 0.333, this customer is a "Judy".
Get the picture?  Good!  We'll take a peek at "Calculating Jennifer" next.

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