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Topics and Objectives:
This module introduces lifts and gains which are commonly used measures to assess a model's performance. Presumably a model will outperform no model -
but how much better is it?
So far we have used RFM to predict who will respond to a marketing campaign and to select who to target. Next we will consider more sophisticated
statistical models. But first we'll consider lifts and gains as a way to gauge a model's performance - they can also be used to compare alternative or competing models.
Required Readings:
Assessing a Model's Performance: Lifts, Gains and Profits
Starting with some basic information, this note explains what lift and gains are, and steps you through the calculations.
Assignment 2: Assessing RFM at Tuscan Lifestyles
This assignment asks you to compare how well RFM works compared to mass mailing for a catalog offering.
Excel file for assignment: lifts and gains.xls
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