Download Decision Trees in Analytical Model Development

A quick look at a case using…
DECISION TREES IN ANALYTICAL
MODEL DEVELOPMENT
presented by
Marty Middleton
for ISQS 7342
Fall 2008
INTRODUCTION

Company named Nets2U…
markets networking equipment to businesses
 has existing client base
 sales history in a targeted geographic area


Business to business marketing application
OBJECTIVE

Nets2U seeks to…
improve targeting of regional customers, and
 ultimately expand sales


Nets2U has seeks an analytical model

Prioritize potential sales accounts based on…
probability of sale
 value of sale (possible)
 expected servicing costs (possible)


Target sales activities according to priority
APPROACH



Use data mining techniques as components of the
general analytical model
Use known and existing sales data to forecast
sales among segments of demanders
Match known sales (and attributes) with
attributes of universe data to forecast
opportunities
DATA

Firm sales data


known data collected by firm
Universe data of target region

supplied by data vendors (Dun and Bradstreet, etc)
MODEL DEVELOPMENT

Use Decision Trees to find key predictors of sales

Explore the firm sales data using relationships on
commercial data fields
Enterprise size
 Corporate location
 Regional concentration

MODEL DEVELOPMENT

Combine predictive approaches – Ensemble
Decision trees
 Regression
 Neural network

MODEL DEVELOPMENT
RESULTS

Predicted sales probability from Ensemble score
High
 Medium
 Low

76,000 High Probability demanders
 12,000 customers


The power of analytics comes from using known
sales data to build a model that is applied
against the universe of enterprises.