"Predicting Consumer Visit Frequencies with Overdispersion Correction"
"Count" data, such as the number of website visits or product complaints, do not follow standard bell curve rules. Furthermore, the problem of "Variance Being Greater Than the Mean," very frequently encountered in practice, misleadingly narrows the error margins of classical Poisson models. Negative Binomial regression solves this statistical fallacy.
Which Questions Does This Analysis Answer?
- By how much marginally does every extra SMS/E-mail campaign sent to the customer increase the customer's store visit frequency?
- Which model most accurately estimates the variance created by situations in visitor frequencies that are "unexpectedly high or zero"?
So What Could Be the Added Value?
- Realistic Targeting and Resource Planning: Eliminates the "overconfidence" created by classical analyses, guaranteeing that operational capacity planning is done within scientific boundaries (Realistic Variance).
The graph models the effect of the number of exposures to campaign messages on visit frequency. While the Red area (Poisson) draws an excessively narrow confidence interval by failing to read the heterogeneity in the data; the Blue area (Negative Binomial Model) provides a much more reliable Robust Estimation band by capturing the true deviations in human behavior.