Propensity or Predictive modelling is a customer insight technique which uses the analysis of past observations to predict future behaviour. Specifically, propensity modelling can be used to predict the likelihood that a customer will take a particular action or behave in certain (or desired) ways i.e. purchase goods and services or lapse their relationship.
Propensity modelling is used extensively in customer relationship management and data mining to significantly improve the response rates of customer acquisition and retention campaigns.
For example a large membership organisation may use a set of propensity models to reduce the impact of customer churn. By identifying members who have lapsed their relationship and by analysing their profile based on the information known about them, a scoring system can be developed and applied. This scoring and profiling system can then be applied to the remaining membership base therefore identifying which are statistically more likely to lapse their relationship. This information can then be used to target resource and communications for those members that have the highest percentage chance of lapsing.
Essentially propensity modelling helps target the right customers, optimise resources and significantly increases the chances of a positively response from marketing campaigns by removing the need for a “broad brush” approach.
Speak to one of the EWA Customer Insight Specialists today on 01245 492 828, or via our contact form.