Analysis of list segmentation efficacy and campaign optimization



Direct marketers commonly optimize selection of names for campaigns by use of a numerical decile table that displays expected levels of performance for segments derived from statistical models. This article presents mathematical analytical results related to working with that common decile table format and the associated optimization of campaign contact quantities and projected profits. By fitting an equation to the decile table data and by using a financial campaign profit calculation formula, formulas for optimal contact quantities and maximum profitability are derived. With these formulas available, several applications to marketing planning and decision making can be made both easier and more accurate. A framework is illustrated for evaluating the potential improvement in financial performance attainable by developing a better predictive model.