Big data-driven marketing: How machine learning outperforms marketers' gut-feeling

Abstract

This paper shows how big data can be experimentally used at large scale for marketing purposes at a mobile network operator. We present results from a large-scale experiment in a MNO in Asia where we use machine learning to segment customers for text-based marketing. This leads to conversion rates far superior to the current best marketing practices within MNOs. Using metadata and social network analysis, we created new metrics to identify customers that are the most likely to convert into mobile internet users. These metrics falls into three categories: discretionary income, timing, and social learning. Using historical data, a machine learning prediction model is then trained, validated, and used to select a treatment group. Experimental results with 250 000 customers show a 13 times better conversion-rate compared to the control group. The control group is selected using the current best practice marketing. The model also shows very good properties in the longer term, as 98% of the converted customers in the treatment group renew their mobile internet packages after the campaign, compared to 37% in the control group. These results show that data-driven marketing can significantly improve conversion rates over current best-practice marketing strategies. © 2014 Springer International Publishing Switzerland.