Developing Customer Valuation Models for a Health Care Retailer

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Summary

Sagence used its expertise in machine learning and statistical analysis to develop models that determined the incremental value of a specific set of interactions with its customers.

Challenge

The client provides customers with traditional retail, as well as mail-order and web-based healthcare services. With a desire to optimize investments in digital channels, the client wanted to know the value of enhanced prescription management services offered through its website. For example: were customers who used this enhanced service more active and loyal, did they fill more prescriptions than customers who did not subscribe to these services?

Solution

Sagence created a suite of models to determine the incremental value of a customer who subscribed to enhanced services. Working sessions were conducted with client data domain subject matter experts (SMEs) and analysis experts to determine and understand available data. In order to develop this suite of models, Sagence performed extensive data profiling and data quality audits, cleaned and normalized data, executed data transformations to derive new variables and created a database for analysis and modeling purposes. The models utilized a combination of machine learning and statistical techniques. This highly effective model illustrated to the client the value of the digital channel and the importance of ongoing investments into the channel.

Results

The client was able to quantitatively evaluate the incremental value of customers who subscribe to the digital channel. The client was leveraging this new analysis to optimize future investments in the development of the digital channel, as well as in their targeted campaigns to increase the number of subscribers to the digital channel.