07-06-2016 11:28 AM
I am trying to predict an interval target (customer spend in $) using GLM in SAS EM 13.2. I have 80K observations and 300 variables.
The problem that I have with the final model is that the minimum prediction for the target is around $50 whereas 11K of customers have spent less than $50 in the training dataset and 1% of customers have spent less than $1.
Any thoughts on why is this happening or on how to fix it?
The probability distribution that I have used in the GLM model is Gamma with a Log link function. I have also tried other prob. distributions as well as link functions like Tweedie or invert gaussian but Gamma with a log link function produced the smallest ASE. The distribution of Target variable is highly skewed on the right as there are plenty of customers spending lower amounts and only a few spending more than $1000.
Any thoughts are highly appreciated,
07-07-2016 08:08 PM
07-11-2016 01:26 PM
Thank you JBerry,
I really liked your idea but I am still confused that why GLM is unable to predict those small spends even without segmenting the whole population.
I have already segmented the population based on the credit limit of customers: CL le $500 and CL g $500.