Bayesian Imputation for Anonymous Visits in CRM Data

46 Pages Posted: 8 Dec 2015

See all articles by Julie Novak

Julie Novak

IBM Corporation - Thomas J. Watson Research Center

Elea McDonnell Feit

Drexel University - Department of Marketing

Shane Jensen

University of Pennsylvania - Statistics Department

Eric Bradlow

University of Pennsylvania - Marketing Department

Date Written: December 7, 2015

Abstract

Targeting individual consumers has become a hallmark of direct and digital marketing, particularly as it has become easier to identify customers as they interact repeatedly with a company. However, across a wide variety of contexts and tracking technologies, companies find that customers can not be consistently identified which leads to a substantial fraction of anonymous visits in any CRM database. We develop a Bayesian imputation approach that allows us to probabilistically assign anonymous sessions to users, while ac- counting for a customer’s demographic information, frequency of interaction with the firm, and activities the customer engages in. Our approach simultaneously estimates a hierarchical model of customer behavior while probabilistically imputing which customers made the anonymous visits. We present both synthetic and real data studies that demonstrate our approach makes more accurate inference about individual customers’ preferences and responsiveness to marketing, relative to common approaches to anonymous visits: nearest- neighbor matching or ignoring the anonymous visits. We show how companies who use the proposed method will be better able to target individual customers, as well as infer how many of the anonymous visits are made by new customers.

Keywords: Bayesian estimation, missing data, imputation, hierarchical modeling, targeted marketing

Suggested Citation

Novak, Julie and Feit, Elea McDonnell and Jensen, Shane and Bradlow, Eric, Bayesian Imputation for Anonymous Visits in CRM Data (December 7, 2015). Available at SSRN: https://ssrn.com/abstract=2700347 or http://dx.doi.org/10.2139/ssrn.2700347

Julie Novak

IBM Corporation - Thomas J. Watson Research Center ( email )

1 New Orchard Road
Armonk, 10504-1722
United States

Elea McDonnell Feit (Contact Author)

Drexel University - Department of Marketing ( email )

United States

Shane Jensen

University of Pennsylvania - Statistics Department ( email )

Wharton School
Philadelphia, PA 19104
United States

Eric Bradlow

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States
215-898-8255 (Phone)

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