Loyalty Program and Coupon Model

Working with a grocery chain: how would you define their loyalty program, what data would you capture, and how would you build a model to issue coupons to increase sales?

Asked in the case interview stage. Address the program's objectives, its success metrics, the data needed to understand customer behavior, and how experimentation would distinguish incremental sales from purchases that would have happened anyway.

Requirements

1. Define the loyalty program and its primary and guardrail metrics.
2. Specify the customer, transaction, product, promotion, and channel data to capture.
3. Describe a modeling approach for targeting coupons, including the prediction target and evaluation method.
4. Explain how you would test incremental impact and manage risks such as margin erosion, cannibalization, and over-targeting.

Data Available

Assume access to loyalty enrollment, point-of-sale transactions, product and store catalogs, coupon issuance and redemption logs, customer communications, and basic customer attributes.