Question

watershed is a media services company that provides online streaming movie and television content. as a result of the competitive market of streaming service providers, watershed is interested in proactively identifying will unsubscribe in the next three months based on the customer's characteristics. for a test set of customers, the file watershed contains an indication of whether a customer unsubscribed in the past three months and the classification model's estimated unsubscribe probability for the customer. in an effort to prevent customer churn, watershed wishes to offer promotions to customers who may unsubscribe. it costs watershed $15 to offer a promotion to a customer. if offered a promotion, it successfully persuades a customer to remain a watershed customer with probability 0.7, and the retaining the customer is worth $60 to watershed. click on the datafile logo to reference the data. assuming customers will be offered the promotion in order of decreasing estimated unsubscribe probability; determine how many customers watershed should offer the promotion to maximize the profit of the intervention campaign. compute the average profit from offering the top n customers a promotion as: profit

Answer 1

To maximize profit, Watershed should offer the promotion to the customers with the highest estimated unsubscribe probability.

Step-by-step explanation:

To determine how many customers Watershed should offer the promotion to maximize profit, you need to consider the cost of offering the promotion and the potential revenue gained from retaining customers. Follow these steps:

1. Sort the customers in descending order based on the estimated unsubscribe probability.
2. Calculate the profit for each customer by subtracting the cost of the promotion.
3. Determine the customer offering sequence by selecting customers from the sorted list until the cumulative profit is maximized. For example, if offering the promotion to the top three customers results in the highest cumulative profit, then Watershed should offer the promotion to those three customers.