DAO Web Page of Fame

Celebrating Summer Successes Since 2006

  INDUCTEE:  Potter, Benjamin

YEAR:  2009

CATEGORY: Regression

 

 

progressive.jpgThe challenge given to Ben in his summer internship with Progressive was to figure out why Geico’s online conversion rates (defined as the percentage of people requesting a price quote who subsequently purchased a policy) were higher than Progressive’s.  Was it due to the fact that Geico’s prices were generally lower?   Was the conversion of a Geico prospect driven by the absolute Geico price or the Geico price relative to Progressive’s price?  And, most importantly, how should Progressive respond?

Using simple data charts, Ben first established that Geico’s prices were generally lower and that, as expected, conversion rates for both companies declined with the price quoted.  In addition, for almost all price quotes, the Progressive conversion rate was lower than Geico’s.  Using regression, Ben next looked at prospects who received quotes from both companies and established that relative (rather than absolute) price was the better predictor of conversion.    Using this model, Ben was able to predict the gains associated with a change in pricing. 

Ben’s analysis led to proposed changes in pricing with an estimated impact of $10 million in incremental profit!