Promotion Analytics
Promotion Effectiveness
Key Concept
Quantify sales uplift compared to a predicted baseline without promotion
Subtract discount to get net impact
Impact
Reduce discounts on promotions with negative net impact (discount > lift)
Use model to predict uplift of promotions with different mechanics
For example, BOGO vs 50% discount on Segment ABC
Use the prediction model to explore potential mechanics for new promotions
Mechanics Optimization
Key Concept
Impact
Narrow down promotion incentives to a small range for A/B Testing
Recommend optimized incentive range to maximize sales or profits
Depending on data, mechanics can be optimized for every level of business
Reduce overall budget with improved promotion outcomes
A/B Testing
Key Concept
Impact
Allow more members to receive the best promotions
Stronger decision-making supported by statistics
Apply inferential statistics to improve test reliability and minimize experiment size
Calculate statistical significance levels and adjust control groups to sample size to a minimum
Product Recommendation
Key Concept
Impact
Predict interest score for every customer x product combination
Separate models can be built for new products or customers with no data
Find top potential customers for product-specific promotions
Combine with churn prediction for personalized retention campaign
Category Decision Tree
Key Concept
Impact
Recategorize products using network analysis & clustering models
Grouping products with similar relationships together
Support in-store and in-app digital assortment layouts
Visualize category hierarchy that represents customer decision making
Visualize category hierarchy that represents customer decision-making
Improve other analytics that use product categories as an input (segmentation, CLV key drivers, etc.)
Cross-Sell Rules Mining
Key Concept
Impact
Quantify the relationship or “lift” between two products using apriori rules mining
Calculate lift, support, and confidence, and combine with chi-squared statistical tests
Identify bundling opportunities for products with high lift
Use as a feature for halo/cannibalization effect for promotion effectiveness