Compare Targeting Strategies with Lift

Context

ShopNow is deciding between two customer targeting strategies for a retention campaign: Strategy A, a propensity model that ranks users by predicted purchase likelihood, and Strategy B, a rule-based segment built from recent browsing and cart activity. The marketing team can contact only the top 20% of 1,000,000 eligible users due to budget limits.

Performance Data

Overall historical conversion rate in the evaluation set is 5.0%. Both strategies were evaluated on the same 1,000,000-user holdout sample.

Additional campaign economics:

The Problem

The VP of Marketing wants to know which strategy should be used for the next campaign and how a lift chart should guide that decision, rather than relying only on overall model quality.

Requirements

1. Interpret the lift chart for both strategies at different targeting depths.
2. Determine which strategy is better under the 20% contact constraint.
3. Estimate expected conversions and campaign profit for each strategy at the allowed cutoff.
4. Explain why the preferred strategy may change if the budget expands to 50% of users.
5. Recommend how to monitor performance after launch.

Constraints

• Only one strategy can be deployed this month.
• Budget supports contacting at most 200,000 users.
• The business cares more about incremental conversions in the contacted segment than full-population averages.