BANK MARKETING: Predicting Whether The Customer Will Subscribe To Term Deposit.

Introduction

Marketing is a process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. Marketing campaigns are characterized by focusing on the customer needs and their overall satisfaction. Nevertheless, there are different variables that determine whether a marketing campaign will be successful or not. There are certain variables that we need to take into consideration when making a marketing campaign.

The 4 P's of Marketing

1. Segment of the Population: To which segment of the population is the marketing campaign going to address and why? This aspect of the marketing campaign is extremely important since it will tell to which part of the population should most likely receive the message of the marketing campaign.

2. Distribution channel to reach the customer's place: Implementing the most effective strategy in order to get the most out of this marketing campaign. What segment of the population should we address? Which instrument should we use to get our message out? (Ex: Telephones, Radio, TV, Social Media Etc.)

3. Price: What is the best price to offer to potential clients? (In the case of the bank's marketing campaign this is not necessary since the main interest for the bank is for potential clients to open depost accounts in order to make the operative activities of the bank to keep on running.)

4. Promotional Strategy: This is the way the strategy is going to be implemented and how are potential clients going to be address. This should be the last part of the marketing campaign analysis since there has to be an indepth analysis of previous campaigns (If possible) in order to learn from previous mistakes and to determine how to make the marketing campaign much more effective.

Problem Statement

Your client is a retail banking institution. Term deposits are a major source of income for a bank. A term deposit is a cash investment held at a financial institution. Your money is invested for an agreed rate of interest over a fixed amount of time, or term. The bank has various outreach plans to sell term deposits to their customers such as email marketing, advertisements, telephonic marketing and digital marketing. Telephonic marketing campaigns still remain one of the most effective way to reach out to people. However, they require huge investment as large call centers are hired to actually execute these campaigns. Hence, it is crucial to identify the customers most likely to convert beforehand so that they can be specifically targeted via call.

You are provided with the client data such as : age of the client, their job type, their marital status, etc. Along with the client data, you are also provided with the information of the call such as the duration of the call, day and month of the call, etc. Given this information, your task is to predict if the client will subscribe to term deposit.

About The Dataset

The dataset is related with direct marketing campaigns (phone calls) of a Portuguese banking institution.The classification goal of this dataset is to predict if the client or the customer of polish banking institution will subscribe a term deposit product of the bank or not. Now the question comes what is term deposit ?

What is a Term Deposit?

A term deposit is a cash investment held at a financial institution. Your money is invested for an agreed rate of interest over a fixed amount of time, or term. Term deposits can be invested into a bank, building society or credit union.

When the money is deposited, the customer understands that the money is there for the pre-determined period which usually ranges from 1 month to 5 years and the interest rate is guaranteed not to change for that nominated period of time. Typically, the money can only be withdrawn at the end of the period – or earlier with a penalty attached.

Term deposits are popular with investors who prefer capital security and a set return as opposed to the fluctuations of, say, the share market. Many investors also use term deposits as a part of their investment mix.For more information with regards to Term Deposits please click on this link from Investopedia: https://www.investopedia.com/terms/t/termdeposit.asp

You are provided with following files:

1. train.csv : Use this dataset to train the model. This file contains all the client and call details as well as the target variable “subscribed”. You have to train your model using this file.

2. test.csv : Use the trained model to predict whether a new set of clients will subscribe the term deposit.

Dataset Attributes

Here is the description of all the variables :

• Variable: Definition
• ID: Unique client ID
• age: Age of the client
• job: Type of job
• marital: Marital status of the client
• education: Education level
• default: Credit in default.
• housing: Housing loan
• loan: Personal loan
• contact: Type of communication
• month: Contact month
• day_of_week: Day of week of contact
• duration: Contact duration
• campaign: number of contacts performed during this campaign to the client
• pdays: number of days that passed by after the client was last contacted
• previous: number of contacts performed before this campaign
• poutcome: outcome of the previous marketing campaign

Output variable (desired target):

• Subscribed (target): has the client subscribed a term deposit?

Tools and Algorithms Used for Analysis

• Python
• Numpy
• Pandas
• Seaborn
• Logistic Regression
• Decision Tree Classifier

References

1. Kaggle Datasets
2. UCI Machine Learning Repository