InsightIQ Blog

Offer Optimization Framework

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Feb 15 2010

In a recent blog, my colleague Roman Lenzen discussed concepts on how to optimize offers in both inbound and outbound channels. It was a great blog and I wanted to expand on the critical components that one should consider while building the offer optimization framework:

  • Learning period - This is one of the most critical steps in any offer optimization framework. During the learning period, all offers are in test or learning mode and you can see offer performance across all segments.
  • Control groups: Control groups will need to be created at multiple levels so that once the learning period is complete, the ability to consistently measure offer performance across specific segments is accomplished using a segment specific control group and there is a master control group as well.
  • Testing: Within each segment it is critical to constantly test multiple offers using champion challenger type techniques.
  • New Offers: Introducing new offers will require set up time before the offer can be rotated as part of the segment.

These steps are critical as you define your offer optimization framework and have tremendous implications to the technical design from capturing the response and contact history to measuring the offer performance across segments and how new offers can be introduced.  One of the challenges in implementing this framework is that often offer performance is impacted by the channel and this often requires response modeling to be an integral part of the offer optimization framework. These critical steps along with the steps laid out by Roman will enable you to build an offer optimization engine that will scale as you want to expand the offer sets as well as the interactions across all the channels. This will also help drive automation capabilities for the offer optimization engine.

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