12. How to quantify an indicator's dollar value? (For instance, under deposit, the indicator Direct-Deposit.)

Generally, we calculate the average revenue of all direct deposit customers and the average revenue of all non-direct deposit customers; then we take the difference. It's not convincing to claim that the difference is the dollar value of the Direct-deposit indicator because the two groups have different start points (direct-deposit customers may have much higher balance or loan amount).

The best way to quantify is to use customers from the two groups with the same start values:

1. Randomly choose 10,000 direct deposit customers.
2. Choose starting criteria (normally a few important variables: balance, loan amount, credit line, number of accounts, etc.)
3. Use the criteria to search 10,000 non-direct deposit customers with similar values of the chosen variables.
4. Examine the two groups difference and find out if the differnece is statistically significant.
5. Calculate these two groups' average revenue and find the difference. We can claim that the difference is caused by converting a non-direct deposit customer to a direct deposit customer.

Still need help?
email us your question

Previous. . Back to Q&A.