Mining Optimal Actions for Profitable CRM

  • Authors:
  • Charles X. Ling;Tielin Chen;Qiang Yang;Jie Cheng

  • Affiliations:
  • -;-;-;-

  • Venue:
  • ICDM '02 Proceedings of the 2002 IEEE International Conference on Data Mining
  • Year:
  • 2002

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Abstract

Data mining has been applied to CRM (Customer RelationshipManagement) in many industries witha limitedsuccess.Most data mining tools can only discover customer modelsor profiles (such as customers who are likely attritors andcustomers who are loyal), but not actions that would improvecustomer relationship (such as changing attritors toloyal customers). We describe a novel algorithm that suggestsactions to change customers from an undesired status(such as attritors) to a desired one (such as loyal). Our algorithmtakes into account the cost of actions, and further,it attempts to maximize the expected net profit. To our bestknowledge, no data mining algorithms or tools today can accomplishthis important task in CRM. The algorithm is implemented,with many advanced features, in a specializedand highly effective data mining software called ProactiveSolution.