Data Mining for Direct Marketing: Problems and Solutions

Charles X. Ling and Chenghui Li

Direct marketing is a process of identifying likely buyers of certain products and promoting the products accordingly. It is increasingly used by banks, insurance companies, and the retail industry. Data mining can provide an effective tool for direct marketing. During data mining, several specific problems arise. For example, the class distribution is extremely imbalanced (the response rate is about 1%), the predictive accuracy is no longer suitable for evaluating learning methods, and the number of examples can be too large. In this paper, we discuss methods of coping with these problems based on our experience on direct-marketing projects using data mining.


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