Targeting a 20% Subset With a Free-Delivery Promotion to Maximize Incremental Orders per Dollar
Context
You work on a two-sided delivery marketplace and want to target at most 20% of customers with a free-delivery promotion. Your objective is to maximize incremental orders per dollar of promotional spend.
Define the causal estimand (individual treatment effect/uplift):
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uplift(x) = P(Y = 1 | T = 1, X = x) − P(Y = 1 | T = 0, X = x), where:
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Y = 1 if the customer places at least one order in the evaluation window
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T ∈ {0,1} is assignment/exposure to the free-delivery promotion
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X is the customer feature vector
Tasks
(a) Propose an experiment to collect training data, covering randomized holdout, treatment density choices, and compliance tracking.
(b) Propose a modeling approach (e.g., T-/S-/X-/DR-learner or direct uplift models). Describe key features and how you will avoid leakage.
(c) Recommend offline evaluation metrics (Qini, AUUC, uplift-AUC) and a cross-validation strategy.
(d) Specify an on-policy decision rule to choose the top-K customers given a fixed 20% targeting budget and a per-user cost curve for the promotion.
(e) Define guardrails for fairness across geographic zones and user tenure cohorts.
(f) Describe how you will handle interference/spillovers (e.g., delivery capacity constraints, surge) and positivity violations.
Finally, explain how you would deploy and run a sequential test to validate lift without bias from response saturation.