Method for optimizing net present value of a cross-selling marketing campaign

• US 7,499,868 B2
• Filed: 01/30/2006
• Issued: 03/03/2009
• Est. Priority Date: 08/06/1999
• Status: Expired due to Term

• Current Assignee: Experian Information Solutions Incorporated (Experian plc)
• Original Assignee: Marketswitch Corp. (Experian plc)
• Inventors: Gibiansky, Leonid, Fishman, Vladimir, Galperin, Yuri
• Primary Examiner(s): Sterrett; Jonathan G
• Application Number:
  US11/343,280
• Publication Number:
  US 20060218033A1
• Time in Patent Office: 1,128 Days
• Field of Search: 705/10
• US Class Current: 705/7.29
• CPC Class Codes: G06Q 10/0631 Resource planning, allocation, distributing or scheduling for enterprises or organisations
• CPC Class Codes: G06Q 10/06375 Prediction of business process outcome or impact based on a proposed change
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 30/0201 Market modelling; Market analysis; Collecting market data
• CPC Class Codes: G06Q 30/0202 Market predictions or forecasting for commercial activities
• CPC Class Codes: G06Q 30/0203 Market surveys; Market polls
• CPC Class Codes: G06Q 30/0247 Calculate past, present or future revenues
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes

Abstract

The present invention applies a novel iterative algorithm to the problem of multidimensional optimization by supplying a strict, nonlinear mathematical solution to what has traditionally been treated as a linear multidimensional problem. The process consists of randomly selecting a statistically significant sample of a prospect list, calculating the value of the utility function for each pair of an offer and selected prospects, reducing the original linear multidimensional problem to a non-linear problem with a feasible number of dimensions, solving the non-linear problem for the selected sample numerically with the desired tolerance using an iterative algorithm, and using the results to calculate an optimal set of offers in one pass for the full prospect list.

Claims

1. A computer-implemented method for optimizing a cross-selling marketing campaign, the method comprising:

accessing a plurality of computer-readable instructions; and

executing the instructions on a computer system comprising computer hardware including at least one computer processor, wherein execution of the instructions by the computer processor causes the computer system to perform a plurality of operations comprising;

selecting from a plurality of customers a statistically significant sample of customers;

calculating a plurality of response probabilities that each represent a probability that a specific customer will respond to a specific promotion;

calculating a plurality of profitabilities that each represent a profitability resulting from a specific customer responding to a specific promotion;

storing data that define a plurality of customer constraints in computer storage, wherein the customer constraints are selected from a group consisting of;

an eligibility condition constraint, a peer group logic constraint, and a maximum number of offers constraint;

storing data that define a plurality of economic constraints in computer storage, wherein each economic constraint is reflective of an economic goal of the cross-selling marketing campaign, thus formulating a linear optimization problem with a plurality of variables;

reducing the linear optimization problem to a non-linear problem with a feasible number of dimensions, wherein the non-linear problem is mathematically equivalent to the linear optimization problem; and

selecting a marketing campaign with desired expected utility and that satisfies the customer constraints and the economic constraints at least in part by iteratively solving the non-linear problem on the sample of customers within a pre-defined tolerance, wherein the non-linear problem takes into account at least some of the response probabilities and at least some of the profitabilities and the marketing campaign defines which customers receive which promotions.

2. The method of claim 1 wherein selecting a marketing campaign with desired expected utility comprises selecting a marketing campaign that is expected to have a higher net present value than another marketing campaign.

3. The method of claim 1 wherein selecting a marketing campaign with desired expected utility comprises selecting a utility function and using the utility function to calculate an expected utility of the marketing campaign.

4. The method of claim 1 wherein the customer constraints are expressed as linear functions.

5. The method of claim 4 wherein the economic constraints are expressed as linear functions.

6. The method of claim 1 wherein the customer constraints are expressed as at least one inequality.

7. The method of claim 6 wherein the economic constraints are expressed as at least one inequality.

8. The method of claim 1 wherein selecting a marketing campaign with desired expected utility further comprises generating a plurality of solicitation values that define which customers receive which promotions.

9. A campaign optimization system comprising:

at least one data repository of computer storage containing at least one collection of data comprising;

customer data related to a statistically significant sample of customers;

response probability data representing a plurality of probabilities that a specific customer will respond to a specific promotion;

profitability data representing, for each of a plurality of customers, profitability resulting from a specific customer responding to a specific promotion;

customer constraint data representing a plurality of customer constraints,wherein the customer constraints are selected from a group consisting of;

an eligibility condition constraint, a peer group logic constraint, and a maximum number of offers constraint; and

economic constraint data representing a plurality of economic constraints, wherein each economic constraint is reflective of an economic goal of the cross-selling marketing campaign;

computer hardware comprising at least one computer processor configured to execute software components that each comprise computer-executable instructions;

a first software component configured, upon execution, to cause the computer processor to formulate a linear optimization problem with a plurality of variables;

a second software component configured, upon execution, to cause the computer processor to reduce the linear optimization problem to a non-linear problem with a feasible number of dimensions, wherein the non-linear problem is mathematically equivalent to the linear optimization problem; and

a third software component configured, upon execution, to cause the computer processor to select a marketing campaign with desired expected utility and that satisfies stored customer constraints and stored economic constraints at least in part by irerativly solving the non-linear problem on the sample of customers within a pre-defined tolerance, wherein the non-linear problem takes into account at least some of the stored response probabilities and stored profitabilities and the marketing campaign defines which customers receive which promotions.

10. The system of claim 9 wherein the at least one data repository comprises at least one database.

11. The system of claim 9 wherein the third software component is configured to select a marketing campaign with desired expected utility by selecting a marketing campaign that is expected to have the a net present value that is higher than another marketing campaign.

12. The system of claim 9 wherein the the second software component selects a marketing campaign with desired expected utility by selecting a utility function and using the utility function to calculate an expected utility of the marketing campaign.

13. The system of claim 9 wherein the customer constraints are expressed as linear functions.

14. The system of claim 12 wherein the economic constraints are expressed as linear functions.

15. The system of claim 9 wherein the customer constraints are expressed as at least one inequality.

16. The system of claim 15 wherein the economic constraints are expressed as at least one inequality.

17. The system of claim 9 wherein the second software module is further configured to generate and store in the at least one data repository a plurality of solicitation values that define which customers receive which promotions.