1. BookBinders Book Club 1 1

2. Quote for the Day
You will lose money sending a terrific piece of mail to a lousy list, but make money sending a lousy piece of mail to a terrific list!
-- Direct mail lore

3. Current Industry Practice
Dominant “Scoring Rule” used in the industry is the RFM (Recency, Frequency, and Monetary) model:
Recency
Last purchased in the past 3 months 25 points
Last purchased in the past months 20
Last purchased in the past months 10
Last purchased in the past months 5
Last purchased in the past 18 months 0
Come up with similar “scoring rules” for Frequency and Monetary.

4. Summary of Coefficients

5. Predictions of Probability of Purchase
Regression:
MNL:
Neural Network:
Predicted values are computed from within the model using the “verify” feature.

6. Expected Response Rates in Holdout Sample by Mailing to the Top 60%

7. Economics of Mailings
Note: If we mailed to everyone on the list, we can expect a response rate of 8.9%.