The Caravan Case: Motivation

Name	The Caravan Case: Motivation
Description	A project is started to reduce the cost of direct marketing. Over the years a large database of client behaviour has been collected, and the marketeers expect to realise cost reduction in direct marketing by exploiting this data in better targeting prospective clients. In line with experiences in other financial enterprises, two goals are set: increasing the success of direct marketing campaigns by getting the same response-volume with smaller campaigns (cost reduction) focussing investment of advertisement funds on media that are attended by prospective clients     In a brainstorm, attended by marketeers and data analists, data mining is raised as a means to realise this. However, no one within MIC has experience in data mining. In order to get acquainted with this new technology, and to assess the business potential of data mining for MIC, one decides to initiate a pilot focussing on caravan policies. Goal of the pilot is to assess to what extent data mining can serve the above mentioned goals. The forthcoming marketing campaign is taken as a pilot. A subset of 6000 customers is drawn from the total target database for this campaign.     In a normal direct marketing campaign, the subset of 6000 customers would all be approached with a caravan policy offer. The cost reduction attributed to the data mining is realised by only targeting a portion of the clients as indicated in the pilot. On the other hand, if one misses the main target of presenting the offer to most potential clients, a reduced response rate will result. The realised response (matched against the expected response) defines the success of the data mining approach.     Thanks to Sentient Machine Research for providing the caravan policy data.
Case Study	The Caravan Policy Case