Efficiently Evaluating Targeting Policies: Improving Upon Champion vs. Challenger Experiments

Champion versus challenger field experiments are widely used to compare the performance of different targeting policies. These experiments randomly assign customers to receive marketing actions recommended by either the existing (champion) policy or the new (challenger) policy, and then compare the aggregate outcomes. We propose an alternative experimental design and an alternative estimation approach to improve the evaluation of targeting policies.

Our experimental design randomly assigns customers to marketing actions. This allows evaluation of any targeting policy without requiring an additional experiment, including policies designed after the experiment is implemented. The proposed estimation approach identifies customers for whom different policies recommend the same action and recognizes that for these customers there is no difference in performance. This allows for a more precise comparison of the policies.

We illustrate the advantages of the proposed experimental design and the proposed estimation approach using data from an actual field experiment. We also demonstrate that the grouping of customers, which is the foundation of our estimation approach, can help to improve the training of new targeting policies.