EDEN HANSING PAGE 01

WHAT DO OUR CUSTOMERS LOOK

LIKE?

In our business of selling fixer-upper homes online, we want to improve our efficiency in
customer acquisition. Our data has proven to be effective at differentiating between
customers and non-customers. We will find which variables are the best predictors in
finding a customer, how each variable effects an individual’s likelihood of being a
customer and by how much.

The most important predictors when predicting if an individual looks like a customer or
not is real estate investment, femaleness, and if they own a home. We can see how
effective this variable is at differentiating a response that looks like a customer from just
the average response. For example, customers are close to 80% more likely to invest in
real estate than non-customers. Customers are 23% more likely than average to be
male. These things are important to know when finding what kind of people we want to
target.

We use these variables to see what kind of activities our customers do and what profiles
they usually have. When we look at these activities and add them all together to find
what our customers look like, we are using a multivariate solution.
EDEN HANSING PAGE 02

HOW DO WE FIND OUR CUSTOMERS?

We found a pattern that shows how the things

that people do make them look more like a
customer or not. A variable that has a (+) in front
of it means that the more of that variable you
have, the higher your overall score will be.
Negative scores mean that activity looks less like
our customer. The number in front of each
variable tells us how much your score will go up
for having more of that variable. In the pie chart
you can see how important each variable is to
your overall score. For example, each additional
year that you have in length of residence gives
your score -.120. If you have lived in your house
for 3 years, we would take away -.36 from your
overall score.

HOW WELL DOES THIS WORK?

We score a set of known customers and non-customers with the scorecard above and then rank them
from the highest (most similar to our customers) to lowest scores. Then, we group these people into
ten equal-sized deciles.

The group in the top decile that have

the highest scores (people we think
look most like our customers),
contains the highest concentration of
customers. We see that what we
observed has verified our explanation.
The group in the lowest decile,
contains the highest concentration of
non-customers. The pattern we found
has successfully explained the
difference between customers and
non-customers.