Can You Predict the Future?
The Right Approach?
I'm frequently asked which approach to use. The following Q&A section touches on the most common questions direct marketers have about the use of regression analysis and neural networks for modeling.
Here are my thoughts:
Q: Which technology—regression or neural networks—provides the best results?
A: Sometimes, neural networks can outperform a regression model. Many times, they cannot. It makes sense to use both, and assess the performance outcomes of both. If the analyst identifies a significant difference in performance from one technique, then consider using the technique that delivers the better result.
If a difference in performance is not readily apparent, then regression is clearly the way to go. Ease of model interpretation and deployment provides significant advantages to the regression tool.
Q: Do I need a trained statistician and/or analyst when developing my models?
A: Yes. Both tools require exploratory analysis. Marketers who believe they can automatically develop neural network or regression models without the guiding hand of a trained statistician or analyst are making a mistake. Optimal model development occurs when a trained statistician works closely with a seasoned marketer.
Q: Is software available for both regression and neural nets?
A: Yes, both regression and neural networks technologies are available either as a tool within a larger statistical or data-mining package, or as a stand-alone product. Just make sure that the hand guiding either software tool is an experienced one.
A More Complete Toolbox
Neural networks are an additional weapon in the analyst's toolbox. No one technology will always result in a superior solution. Therefore, having both techniques available makes the most sense.
Frankly, it is not the tool that makes or breaks an analysis. Rather, it is the synergies of the skilled analyst and the veteran marketer that can provide the real difference.
Sam Koslowsky is vice president of modeling solutions for Harte-Hanks Inc., a worldwide, direct and targeted marketing company that provides direct marketing services and shopper advertising opportunities to a wide range of consumer and B-to-B marketers. Koslowsky can be reached at (212) 520-3259 or via