MEASURING RESPONSES
 

 

 

 

 

 

 

 

 

 

 

 

 

Standard Error of a Proportion The approach to answering this question uses the idea of a confidence interval. The challenger offer, in the above scenario, is being sent to a random subset of customers. Based on the response in this subset, what is the expected response for this offer for the entire population? For instance, let’s assume that 50,000 people in the original population would have responded to the challenger offer if they had received it. Then about 5,000 would be expected to respond in the 10 percent of the population that received 140 the challenger offer. If exactly this number did respond, then the sample response rate and the population response rate would both be 5.0 percent. How­ ever, it is possible (though highly, highly unlikely) that all 50,000 responders are in the sample that receives the challenger offer; this would yield a response rate of 50 percent.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regression is the process of using the value of one of a pair of correlated vari­ ables in order to predict the value of the second. The most common form of regression is linear regression, so called because it attempts to fit a straight line through the observed X and Y pairs in a sample. Once the line has been established, it can be used to predict a value for Y given any X and for X given any Y. Measuring Response This section looks at statistical ideas in the context of a marketing campaign. The champion-challenger approach to marketing tries out different ideas against the business as usual. For instance, assume that a company sends out a million billing inserts each month to entice customers to do something. They have settled on one approach to the bill inserts, which is the champion offer. Another offer is a challenger to this offer. Their approach to comparing these is: Send the champion offer to 900,000 customers. Send the challenger offer to 100,000 customers Determine which is better. The question is, how do we know when one offer is better than another? This section introduces the ideas of confidence to understand this in more detail.