As businesses race to integrate AI into their software, many turn to first-party data modeling techniques like [RFM (recency, frequency, monetary value)](https://en.wikipedia.org/wiki/RFM_$market_research$) to build predictive models. These models typically rely on user interactions, including website navigation, email engagement, and purchase behavior to anticipate action. But first-party models alone have significant limitations, lacking the depth, speed-to-deployment, and predictive accuracy that businesses need to get ahead in today’s competitive market. 

Faraday’s models solve these problems by integrating rich third-party data from the [Faraday Identity Graph (FIG)](https://faraday.ai/blog/unlocking-the-power-fig), out of the box. The FIG enhances our models by integrating high-quality, consented offline insights into your first-party data, creating a more complete and actionable dataset. By enriching your existing data with verified external attributes—such as demographics, lifestyle indicators, and purchasing behaviors—the FIG fills in gaps, improves predictive accuracy, and speeds up deployment to help businesses reach the right audiences at the right time with the right product.

## Why first-party data alone falls short

First-party data has its advantages, but it also has critical limitations that can hinder AI-driven personalization and prediction.

First-party data is information that businesses collect directly from their customers and audience through owned channels. This includes website activity, purchase history, and email engagement. Because it comes straight from the source, first-party data is highly accurate, privacy-compliant, and essential for personalized marketing and predictive modeling. However, it can be limited in scope, which is why many businesses enhance it with external data for deeper insights.

One major challenge to overcome with first-party data alone is the [cold start problem](https://www.sciencedirect.com/topics/computer-science/cold-start-problem). When a new customer visits your business, there is no past activity to analyze, making it impossible to generate useful predictions without supplemental third-party data. A first-party data-based model will most likely only improve over time as the customer interacts with the brand, but this delay can mean lost opportunities, particularly in industries where real-time data is crucial like financial services.

Even as first-party data accumulates, it often remains noisy and incomplete. Activity data is unpredictable, with various factors influencing when a user engages with your site or makes a purchase, meaning first-party models must quickly adjust to these fluctuations. External factors like age or income level are also essential for understanding customer behavior, but they’re typically not captured in first-party data. Additionally, first-party data only reflects [activity, not affinity](https://faraday.ai/blog/why-first-party-data-and-rfm-is-not-enough). For instance, knowing that someone purchased a pillow tells you little about their broader lifestyle, financial capacity, or long-term interests.

## How Faraday enriches customers’ datasets to power our models

Our data enrichment process uses identity resolution to securely match first-party identifiers—such as email addresses or hashed customer IDs—with the FIG’s extensive dataset before they are fed into our models. This process ensures a seamless connection between your existing data and additional insights, following three key steps:

1. **Secure matching** – Faraday uses identity resolution techniques to match first-party data with offline records, ensuring privacy and compliance along the way.  
2. **Data enrichment** – Once linked, Faraday appends high-quality demographic, behavioral, and lifestyle attributes to each record.  
3. **Model integration** – These enriched profiles are seamlessly fed into our AI models, enabling more accurate predictions and personalized customer experiences. 

[![Data-appends diagram](/images/blog/first-party-merged-w-fig.png)](/images/blog/first-party-merged-w-fig.png)


## Powering better AI with enriched data

Our models’ ability to access the **Faraday Identity Graph (FIG)** solves numerous problems experienced by first-party-only models. Here are some examples:

### 1\. Solving the cold start problem

With the FIG, even first-time visitors are no longer unknowns. By matching first-party identifiers to offline, third-party data, Faraday provides insights into likely interests, purchasing power, and household composition, allowing our models to make informed predictions from the very first interaction.

### 2\. Boosting model stability and accuracy

AI models trained solely on first-party data must constantly adapt to new patterns in an ever-changing environment. The FIG introduces stable, high-quality attributes, reducing reliance on transient, high-variance signals like click-through rates. This results in more durable models that perform consistently over time.

### 3\. Enhancing AI with affinity data

Instead of just looking at past transactions, the FIG integrates data that reflects who customers are, not just what they’ve done. This includes household income, education level, homeownership status, and even media consumption habits.

## The best of both worlds

Faraday’s FIG takes you data to the next level. By seamlessly integrating high-quality, consented third-party insights with your existing first-party information, Faraday empowers you to access more accurate and predictive models through our platform. With this rich array of demographic, lifestyle, and behavioral attributes, you can unlock deeper insights into your customers and make smarter, data-driven decisions. The Faraday Identity Graph goes beyond the limitations of first-party data alone, giving you a clearer, more holistic view of your audience.

Want to see how the FIG can supercharge your AI models? **Let’s talk.**

The Faraday Identity Graph (FIG) allows users to create more accurate, stable, and predictive AI models within our platform with deeper insights into customer behavior and preferences.

Creating better predictive models with the Faraday Identity Graph

It's 4pm on a Monday and your boss has just dropped the news: lead conversion rates are tanking, even as volume has grown dramatically. You need a fix _by Friday_.

Your team is drowning in leads ranging from red-hot to ice-cold—but how do you sort through them?

Luckily you have a tool like Faraday in your belt, which springs into action, collecting and transforming all the relevant data, normalizing it for the situation, extracting representative training sets, engineering features automatically, building dozens of candidate models for the problem, tuning hyperparameters on the fly, and applying the right model to each lead at the right time to gauge its quality.

It’s not just a predictive AI tool, what you have is an AI agent. And it's the ultimate asset for engaging customers at scale, whether that's managing leads, messaging new offers, or personalizing an on-site experience.

Faraday has been building and operating AI agents for thousands of brands for more than 12 years. Now that popular terminology has caught up, we thought we'd share a bit more on the agentic phenomenon.

## A little context

AI agents have actually been around for quite some time. In fact, the idea of machines acting independently to achieve goals dates back nearly a century to science fiction stories like Karel Capek's 1920 play Rossum's Universal Robots (which coined the term, ‘robots’) and Isaac [Asimov’s 1940 classic short story, “Robbie,](https://www.wired.com/story/artificial-intelligence-minds-science-fiction/)” But these robot dreams didn’t take long to transition from science fiction to reality.

[![Shakey the robot full body](/images/blog/ai-agents-blog/shakey-the-robot.jpg)](/images/blog/ai-agents-blog/shakey-the-robot.jpg)
Shakey the Robot, photo credit: computerhistory.org

Indeed, as early as the 1960s, real-world examples of rudimentary robots, such as the [Shakey the robot](https://www.sri.com/hoi/shakey-the-robot/) were already starting to appear. Shakey was the first mobile general-purpose robot and could perceive its surroundings and reason with complex commands, breaking them down into basic chunks without needing explicit instructions for each step. [Shakey was also capable of planning and navigation, and significantly influenced modern robotics and AI techniques.](https://www.computerhistory.org/revolution/artificial-intelligence-robotics/13/289) But in reality, Shakey was, by modern standards, a little shaky.

Shakey could solve problems and utilized symbolic reasoning like modern agentic AI but was massively [limited by weak computational power and rigid programming frameworks.](https://aiworldjournal.com/the-evolution-of-agentic-ai-from-concept-to-reality/) For these reasons it couldn’t compare to the complexity and reasoning ability of modern systems. But despite these limitations, Shakey and [other early robots](https://community.hpe.com/t5/ai-unlocked/a-short-history-of-artificial-intelligence/ba-p/7172315) like it marked major steps forward in our ability to produce machines that could solve problems and make decisions independently. However, the progress was slow, the hardware was clunky, and Shakey and his friends all required an entire room of computers to perform simple tasks—so it wasn’t exactly the autonomous future Asimov had imagined.

[![cover of Asimov's Robbie the Robot, short story](/images/blog/ai-agents-blog/robbie-the-robot-cover.jpg)](/images/blog/ai-agents-blog/robbie-the-robot-cover.jpg)

But while Shakey was still breaking down commands, fiction had already imagined AI with greater capabilities. Take Robbie, the robotic nanny from Asimov’s story. Unlike Shakey, Robbie made independent decisions, learned from experience, and adapted his behavior. Though he doesn’t run on data pipelines or neural networks like modern AI agents, at his core, Robbie functions much like they do, by making decisions and fulfilling tasks independently (and, admittedly, with a cool metal body, but we’re getting there). And where Shakey fell short, today’s AI agents don’t face the same limitations, and the gap between fiction and reality continues to shrink.

Ironically, the main theme of this story was the misunderstanding of new and emerging technologies. With that in mind, let’s break down what AI agents really are, no fiction, just facts.

## Why AI agents are everywhere now

Fast forward to 2025, and AI agents are no longer just science fiction. They’re all over the place: managing supply chains, handling customer service, writing emails, and yes, optimizing marketing campaigns. But why the sudden explosion in AI agent adoption?

A few reasons:

- **Computational power**: Advances in cloud computing and GPUs mean that what used to require a warehouse of machines now runs on your laptop.
- **Better data availability**: AI thrives on data, and today, there’s more of it than ever before.
- **Automation hype**: Everyone wants AI to do the boring stuff so they can focus on the big picture (or maybe take a longer lunch break).

## How AI agents get jobs done

Modern AI agents operate by processing vast amounts of data, learning from patterns, and making decisions based on predefined goals. They typically rely on machine learning models, neural networks, and sophisticated algorithms to analyze information, predict outcomes, and take action.

Some agents function through reinforcement learning, continuously improving their performance based on feedback, while others follow rule-based systems with explicit instructions. Whether it’s a chatbot answering customer inquiries, an autonomous robot navigating an alien environment, or even a predictive model sorting through data, scoring it and then forwarding it to [Shopify](https://www.shopify.com/), AI agents work by combining perception, decision-making, and execution—often in real time—to accomplish tasks with minimal human intervention.

## Common misconceptions about AI agents

But as uncle Ben almost said, with great hype comes great misunderstanding. Here are a few common misconceptions about AI agents:

- **AI agents are sentient.** Nope. They analyze data, follow rules, and optimize for objectives, but they don’t “think” or “feel” in any meaningful way (sorry Robbie, we still love you).
- **AI replaces humans.** Not exactly. AI agents assist and augment human decision-making rather than fully replacing it. The best use cases involve AI handling repetitive or overly complex tasks while humans focus on strategy.
- **More data \= better AI.** This is sometimes true, but as the saying goes: 'Garbage in, garbage out.' More data doesn’t always mean better AI and quality matters more than quantity, especially when you’re looking for actionable business results.
- **AI agents are just fancy chatbots.** This one’s a little off too\! While chatbots are one application, AI agents go far beyond simple conversations. They can analyze data, make decisions, and automate complex tasks in a variety of fields.

## AI agents for the customer experience

Faraday is a flexible and fully composable platform that automatically processes and analyzes your data, delivering actionable insights to a range of targets. By using data and AI agents to make informed decisions and automate complex tasks, Faraday helps businesses streamline processes, optimize strategies, and drive growth. We tap into the true potential of AI agents to help businesses make smarter, faster, and more data-driven decisions, without needing a PhD in machine learning.

So how does Faraday work as an AI agent? Let's break it down:

1. **Independent decision-making**: AI agents act autonomously to achieve specific goals. Faraday independently analyzes consumer data, identifies patterns, and makes predictions without constant human oversight.
2. **Goal-oriented actions**: Agents perform tasks to accomplish defined objectives. Faraday's purpose is clear: to predict consumer behavior and optimize customer acquisition strategies to generate value. View some of [our customer stories](http://faraday.ai/stories) to see how much impact this can make.
3. **Learning and adaptation**: True agents improve over time. Faraday continuously refines its models based on feedback and new data, getting smarter with each interaction and iteration.
4. **Environment interaction**: AI agents observe and respond to their environment. Faraday processes vast amounts of customer data, market signals, and business metrics to inform its decisions.

In short, Faraday builds and operates AI agents for businesses that want data-driven growth, without the guesswork. Unlike Robbie the robot, it won't babysit your kids, but it will make sure your marketing efforts aren't stuck in the past (and if you insist, we do have a founder named [Robbie](https://www.linkedin.com/in/robbieadler/)).

Want to see how Faraday's AI agents can optimize your customer acquisition strategy? Let's talk.

AI agents, like the ones Faraday produces, are transforming marketing by automating predictions, optimizing outreach, and continuously learning from customer data to improve engagement and ROI.

Faraday agents: Why we changed the way we're talking about our core products

In the world of predictive analytics, data is everything. The more accurate, comprehensive, and up-to-date your data is, the better your models perform. That’s where the [**Faraday Identity Graph (FIG)**](https://faraday.ai/docs/abstractions/traits) comes in—a massive, carefully curated dataset designed to help businesses make smarter decisions with ease.

## What is the Faraday Identity Graph?

The Faraday Identity Graph is a powerful combination of multiple data sources, meticulously cleansed, de-duplicated, and feature-engineered to create one comprehensive dataset. It consists of [1,500 data attributes](https://faraday.ai/features/faraday-identity-graph) covering virtually all U.S. adult consumers and their households, offering a deep well of insights into demographic trends, property ownership, life events, financial indicators, and more.

And what’s even better is that it comes built-in with our services.

## So where does the data come from?

We partner with **best-in-breed data providers** like [Epsilon](https://www.epsilon.com/us) to compile a rich dataset that encompasses:

* **Demographic information** (age, education, income, etc.)  
* **Property details** (homeownership, property value, etc.)  
* **Life events** (moving, marriage, new child, etc.)  
* **Financial indicators** (credit attributes, equity, etc.)  
* **Buying patterns** (how they spend across dozens of categories)  
* **Shopping behavior** (e.g. in-store vs online)

By combining multiple premium data sources, we eliminate the need for businesses to juggle multiple vendors—saving them time, effort, and money.

## How frequently is the data updated?

The Faraday Identity Graph is updated regularly throughout the year as we receive new data from our vendors. The frequency of updates varies based on data type, but customers can rest assured that the data contained in our graph is as up to date and relevant as possible to ensure the best predictive outcomes.

## Can I buy the data directly?

Yes\! We offer direct data licensing, allowing businesses to purchase cleansed, consolidated, and competitively priced data. If you're looking for a variety of data sources, without the hassle of amalgamation and the time and expense of working with a range of vendors, we should talk—it’s likely we can save you all that time and money by bundling everything you need into one seamless package, and since we already made that package, you could be accessing that data tomorrow\!

## How can businesses use this data?

Our clients use the Faraday Identity Graph in a variety of ways but here are two core use cases:

* **Data appends:** Businesses can purchase specific data attributes to enhance their own internal models and processes.  
* **AI agents:** We can combine our data with your first-party data to build agents that answer key questions, such as:  
  * **Where are your best customers?** Read about our [market opportunity analysis service](https://faraday.ai/docs/abstractions/MOA).  
  * **Who is most likely to buy?** Check out our [lead scoring quick start guide](https://faraday.ai/docs/quickstarts/leads/lead-scoring).  
  * **What are they most likely to purchase?** Dive into our [product recommender](https://faraday.ai/docs/abstractions/recommenders) system, which predicts the best products or services for each individual.

Whether you're looking for raw data or full-service predictive modeling, Faraday makes it easy to harness the power of data-driven decision-making.

## The Faraday advantage

What makes this data even more valuable is access to our team of forward-deployed data science experts. Our team works alongside you to ensure that you are accessing not just the highest quality data, but the right data for your specific needs. With the addition of this service, whether you're looking for raw data or full-service predictive modeling, Faraday makes it easy to harness the power of data-driven decision-making. 

Additionally, Faraday delivers a broad suite of other services like real-time scoring, giving you instant access to dynamic, data-driven insights that enable rapid decision-making and model explainability, ensuring you can trace every prediction back to its data-driven roots—this transparency enhances model trust and guides smarter adjustments. 

What's more, with immediate access to this rich data from day one, you can avoid the cold start problem, quickly deploying predictive models without sacrificing accuracy. Lastly, Faraday’s flexible API integration allows you to seamlessly incorporate our data into your existing systems, providing a scalable solution that evolves alongside your needs and analytics workflows.

## Questions?

Sounds pretty great right? We think so too. If you want to learn more, reach out to talk to our sales reps or even our data team to learn how Faraday’s data can push your business to the next level\!

The Faraday Identity Graph (FIG) is a massive, meticulously curated dataset of 1,500 attributes covering virtually all U.S. adults, enabling businesses to enhance their models, streamline data sourcing, and make smarter decisions with ease.

Unlocking the power of the Faraday Identity Graph (FIG)

At Faraday, we often hear from clients about their experiences working with our competitors. These conversations give us valuable insights into how our platform stands out in the market, and where we have room for improvement. Recently, one of our clients shared a specific experience that really resonated with us, and we wanted to take the opportunity to highlight it to our audience.

This client, who recently worked with [Think Unlimited](https://thinkunlimited.com/) before moving to Faraday, pointed out some key areas where we outshine our competition. As she put it:

*"The transparency of the data science behind the modeling \[at Faraday\] was refreshing. There were no secrets. It was our data, and it was given back to us in a digestible fashion. We could also easily access the experts behind the science to ask questions."*

We believe that transparency is crucial, and we’ve built our platform with the goal of making data science accessible and understandable for our users, so this was rewarding to hear.

This client also observed a significant difference in the quality of predictions between Faraday and Think Unlimited, noting that Think Unlimited's data science just didn’t seem as robust under the hood. This aligns with our commitment to providing high-quality, validated predictive models that you can trust.

But those observations are just the start. Let’s take a deeper dive into some of the key differentiators we've observed ourselves and how they contribute to Faraday’s unique value proposition.

## Faraday vs. Think Unlimited: Our core differentiators

### 1\. Real-time scoring with Faraday's Lookup API

One of Faraday's core strengths is our ability to score leads in real time. Thanks to our powerful [lookup API](https://faraday.ai/docs/features/lookup-api), users can get immediate feedback on lead quality, before bids are even placed. By receiving immediate feedback, businesses can optimize decisions in real-time, leading to better outcomes in high-pressure or fast-moving situations, such as the [ping post process](https://faraday.ai/blog/so-what-is-a-ping-post-anyway). Think Unlimited, on the other hand, lacks this level of real-time scoring capability, which can slow down the workflow, impact decision-making timelines, and in the case of the ping post process, result in lower quality leads being purchased. 

### 2\. A more robust data set for better predictive power

Our built-in Faraday Identity Graph is a rich third-party [data set](https://faraday.ai/features/faraday-identity-graph) that goes far beyond basic metrics by incorporating a wide range of insights that enhance the accuracy and depth of our predictive models. In addition to traditional data points, we include rich demographic, lifestyle, and behavioral data and this combination of static and dynamic data allows us to understand not just who a customer is, but how they engage with products, services, and brands. Using these third-party insights, Faraday’s models can create a dynamic, multi-dimensional picture of potential customers, leading to more accurate predictions of future actions, such as conversion or product interest.

Faraday’s robust data set also helps solve the [cold start problem](https://www.sciencedirect.com/topics/computer-science/cold-start-problem) by providing this rich data from day one, meaning that brands don’t have to wait for a build-up of their own first-party data before accurate scoring can commence. It also allows them to immediately target new customer segments or groups that they don’t have existing data for, facilitating expansions and allowing them to quickly roll out new campaigns and products.

The depth of our data enables Faraday to generate more accurate, quick, and actionable insights compared to our competitors, empowering businesses to make data-driven decisions with confidence. 

### 3\. Score explainability: know exactly why leads get their score

Faraday emphasizes clear [score explainability](https://faraday.ai/blog/faraday-score-explainability) with all of our models. This means that users can actually know exactly why each lead receives a particular score. This level of transparency is crucial for businesses that need to understand the "why" behind their results. Having this clear visibility into the model’s scoring also helps businesses gain confidence in their decisions and ensures they can optimize their approach based on a better understanding of the process.

That earlier client specifically highlighted this point as being one of the biggest advantages she appreciated with Faraday compared to Think Unlimited, where such transparency can be harder to come by.

### 4\. Flexible integration across use cases

Faraday isn’t just limited to lead scoring. Our platform is adaptable and can fill a range of other use cases, including [product recommendation](https://faraday.ai/docs/how-to/use-cases/customers/next-best-offer), [lead suppression](https://faraday.ai/templates/lead-suppression), and even [churn prediction](https://faraday.ai/templates/churn-scoring), [plus a bunch of other options](https://faraday.ai/templates). This versatility allows businesses to leverage Faraday’s insights across different departments and applications, and also sets them up for success when expanding their business or launching new types of campaigns they haven’t undertaken before. Think Unlimited’s capabilities are more narrowly focused, which can hinder adaptability and expandability.

### 5\. Access to experts

At Faraday, we take our data science seriously. But we also understand that predictive modeling is inherently complex and that just presenting where data comes from doesn't necessarily mean that the client will be able to understand it. 

Score explainability measures are a critical first step but sometimes, the best way to ensure a score is actually explainable is pretty straightforward: just have an expert explain it. That’s why we made the game-changing choice last year to forward deploy our entire data science team, making them directly accessible to our clients—our CTO even works with a range of client accounts to ensure that they’re getting the most possible value out of their investment. This level of open communication and transparency is something Think Unlimited lacks and is the ultimate failsafe to ensure users are able to understand their predictions, and the models behind them.

### 6\. Fully API-based for seamless integration

[Faraday is fully API-based](https://faraday.ai/docs/reference), meaning it can be integrated into any system programmatically, offering unmatched flexibility and customization. This structure not only simplifies integration but also provides the flexibility to adapt the models into any custom workflows, making it an ideal choice for companies looking for a solution tailored to their unique needs. Our API is also well-documented, which facilitates integration into clients’ existing tech stacks and ensures easier operation throughout the customer lifecycle. 

These features dramatically increase speed-to-deployment, with some clients seeing major cost savings or revenue growth [within their first month](https://faraday.ai/blog/optimized-direct-mail-outreach-in-one-month) after signing on. Think Unlimited, in contrast, lacks the API-based framework that makes Faraday so adaptable to a wide range of use cases and workflows.

## Quality predictions and transparency make the difference for our clients

At the end of the day, the quality of the predictions you rely on is what matters most. Our predictions are not only proven to be accurate and value driving, but they’re constantly monitored and revalidated to make sure we’re delivering as much value as possible to our clients. Additionally, Faraday’s data science, transparency, and flexibility make it the clear choice for businesses seeking high-quality predictive analytics that can scale and adapt to their needs, all while remaining understandable and accessible. Think Unlimited may have its place, but when it comes to powerful, explainable models and real-time scoring, Faraday leads the way.

Faraday outshines competitors like Think Unlimited with real-time scoring, a richer data set, transparent predictions, flexible integrations, expert support, and a fully API-based platform.

Faraday vs. Think Unlimited: Our core differentiators

[Direct mail remains a core acquisition strategy for many financial services providers](https://www.lob.com/blog/the-benefits-of-direct-mail-marketing-in-todays-economy), but it comes with a hefty price tag. Each mailer represents an investment, and when sent indiscriminately, costs can spiral with little return.

When this client first came to us at the end of 2024, like many in the industry, they relied primarily on instinct-based direct mail strategies, meaning a significant portion of their outreach was reaching consumers who were unlikely to convert. They knew they were overspending but lacked the tools to pinpoint which mailers were worth sending—and which could be cut without hurting revenue.

This client needed a solution that could optimize their outreach, reduce waste, and maintain strong enrollment numbers. Most of all, they wanted confidence in whatever decision they made—all without disrupting their existing workflow.


## Lead suppression with Faraday

And that’s where Faraday came in. As soon as we identified their challenges, we quickly devised a targeted strategy to help. 

The answer? Faraday’s [lead suppression](https://faraday.ai/templates/lead-suppression/recharge) template.

To enact this strategy, we started by inputting the provider’s recent lead data into our system (maintaining rigorous data privacy standards like HIPAA, GDPR, and SOC-2 compliance throughout the process). This data was then enriched through our [identity resolution](https://faraday.ai/blog/identity-resolution) process with 3rd party data from the built-in Faraday Identity Graph (FIG), which [includes over 1,500 attributes on more than 240 million U.S. consumers and their households](https://faraday.ai/features/faraday-identity-graph), and features nuanced demographic and behavioral indicators that influence consumer actions—ranging from property ownership to life events and purchasing habits.

From there, new predictive models were created and trained on this historical enrollment data (now enriched with 3rd party insights), identifying patterns and trends that distinguished high-value leads from low-value ones. Then, using advanced machine learning techniques, the system assigned each lead a predictive score, ranking them into ten distinct deciles based on their likelihood to convert. With this scoring system in place, a [cut-off threshold](https://medium.com/swlh/determining-a-cut-off-or-threshold-when-working-with-a-binary-dependent-target-variable-7c2342cf2a7c) was established to determine the point at which the cost of printing and sending a mailer outweighed the expected return, ensuring that outreach efforts remained cost-effective.

Finally, Faraday delivered an optimized, high-fit mailing list back to the provider and armed with this refined list, they were able to move forward with confidence, ensuring that every mailer sent had a greater likelihood of driving enrollment. For a visual breakdown of this process, check out our recent blog on lead suppression, [here](https://faraday.ai/blog/holdout-testing-with-faraday).

So how did it go? 


## The results (so far)

If you noted the timestamp on this article, you might be thinking to yourself, “Well, they reached out at the end of 2024 and this was published on Feb 21, 2025, so did they even get the models rolled out yet?” 

Well, despite the short timeframe, they not only deployed the models and sent direct mail based on their predictions, but have also already seen a significant reduction in costs, all while maintaining strong engagement with high-quality leads. 

Indeed, by suppressing low-likelihood recipients, they were already able to send over **80,000 fewer mailers**, producing **a net savings of nearly $40,000**, demonstrating the immediate financial benefit of a more targeted approach.

These early financial wins were certainly affirming, but it had only been a month. How did we know that they were actually the result of our model and not just an uptick consumer interest this year?

### Ongoing model validation

At Faraday, we take the [validation](https://faraday.ai/docs/reference/getscopeefficacy) of our models very seriously. We do this before predictions are deployed through our [holdout testing process](https://faraday.ai/blog/holdout-testing-with-faraday) and continue testing on an ongoing basis even after successful implementation. In this case even though we were already seeing positive results, we wanted to see data that confirmed (or challenged) our assumptions. So we conducted further analysis on our models after we started getting results back to confirm that our predictive scoring was actually aligning with real-world outcomes. 

And we found what we were looking for: Leads with the lowest predictive scores showed below-average conversion rates, validating the suppression strategy. Meanwhile, leads in the highest-scoring segments consistently outperformed the average, reinforcing the value of prioritizing the right audience. And what’s even better is that this correlation is only expected to strengthen as more data flows through the model, further refining predictions and maximizing efficiency.

While these financial results would be impressive on their own, they also highlight how quickly Faraday’s models can be deployed and optimized. The contract was signed in late-December, and within weeks, the provider was already seeing meaningful returns. This quick turn around, combined with the ability to continuously refine and improve targeting over time, positions them for even greater efficiency and cost savings in the months and years ahead.

## Next steps

With direct mail suppression already demonstrating clear value, the provider is now looking to further optimize their customer outreach efforts. A key next step? [Call center list scoring](https://faraday.ai/stories/call-center).

Similar to how Faraday’s predictive models helped refine direct mail targeting, they can also help [prioritize leads](https://faraday.ai/templates/lead-prioritization) for call center campaigns. By focusing call center agents’ efforts on high-likelihood prospects, the provider can reduce wasted calls, improve conversion rates, and increase overall campaign efficiency.

We can’t wait to see how they use this technology to generate even more value for their business\!

## In conclusion

In just a short time, this financial services provider has revolutionized its direct mail strategy, reducing unnecessary costs while maintaining strong engagement with high-value leads. Faraday’s predictive modeling has enabled them to move beyond broad, instinct-driven targeting to a data-backed approach, ensuring each mailer sent delivers greater value. And with tens of thousands of dollars saved in only a few weeks, the provider has already realized the immediate financial benefits of a more targeted outreach strategy.

What’s more, looking forward, the provider is well-positioned to refine their targeting approach even further. By continuously updating and optimizing their predictive models, and exploring additional use cases like call center list scoring, they can maximize the efficiency of all customer acquisition channels. 

For this company, this is just the beginning of a smarter, more efficient approach to customer engagement—one that will continue to drive results well into the future.

If you'd like to know how Faraday can produce similar results for your business, **sign up for free**!

In their first month with Faraday, this financial services provider used lead suppression to cut 80,000 low-value mailers and save nearly $40,000.

How this financial services provider optimized their direct mail outreach in just one month

[Klaviyo](https://www.klaviyo.com/) made a big splash last year, bringing entry-[level predictive scoring](https://faraday.ai/blog/why-you-need-predictive-lead-scoring-today) to their massive audience. And we love it—the industry is catching up to what we’ve been doing for years. With AI-powered tools like [predictive analytics](https://faraday.ai/templates/lead-prioritization), [personalized product recommendations](https://faraday.ai/templates/next-best-offer), and advanced [sentiment analysis](https://faraday.ai/blog/seamus-bigquery-interview) for their emails lists, Klaviyo is giving marketers powerful capabilities to forecast customer behavior, personalize messaging, and automate campaigns. But if you’re looking to take it to the next level, there’s a critical missing piece: [deep consumer insights powered](https://faraday.ai/features/faraday-identity-graph) by [third-party data](https://faraday.ai/docs/abstractions/traits).

## Klaviyo’s predictive tools, and their limitations

[Klaviyo’s AI tools](https://www.klaviyo.com/features/ai) offer a solid foundation for email marketers, helping to predict engagement and automate messaging. But recent changes—including increasing costs and [stricter policies around active contacts and list sizes](https://help.klaviyo.com/hc/en-us/articles/24263920096027)—are making efficiency more important than ever.

Though Klaviyo’s AI is powerful, their analysis is also stymied by its lack of inclusion of third-party data. This type of rich demographic and behavioral data inherently improve the depth, nuance, and critically, speed-to-deployment of predictive models. It also radically improves the accuracy and value that they can be expected to produce.

Only with this type of rich third-party data can marketers expect to achieve the highest levels of  speed and precision with their predictive marketing, and that’s where Faraday’s built-in integrations comes in.

## Optimizing Klaviyo lists with Faraday personas

Integrating Faraday’s [personas](https://faraday.ai/docs/abstractions/persona_sets) and [customer segmentation](https://faraday.ai/docs/how-to/connections/segment) capabilities into your existing Klaviyo stack takes your email lists to the next level, allowing you to gain deep insights that Klaviyo alone can’t provide.

With Faraday, you can segment your email lists not just by basic engagement metrics but by [demographics, life events, property details, and other behavioral signals](https://faraday.ai/features/faraday-identity-graph). This level of insight empowers you to tailor content, messaging, and campaigns that are perfectly suited to your audience. Whether it’s understanding the impact of a new home purchase or identifying consumers in a particular life stage, Faraday’s data-driven approach helps you reach the right people at the right time with the most relevant messaging.

By adding these third-party insights to your Klaviyo platform, you unlock smarter segmentation, faster insights, and a deeper understanding of your customers—making your email marketing more efficient, relevant, and impactful.

### The inclusion of this this data improves your Klaviyo lists by:

* **Building smarter segments** based on real-world demographics, life stages, and property data.  
* **Refining automated journeys** to align with consumers’ actual behaviors and preferences.  
* **Improve conversion rates** by sending the right message to the right people at the right time.

## The cold start problem—and how to overcome it

An additional benefit of integrating third-party data into your Klaviyo stack is the ability to avoid the [cold start problem](https://www.sciencedirect.com/topics/computer-science/cold-start-problem), a classic challenge faced by many marketing tools, including Klaviyo’s out of the box predictive scoring. While these tools are able to generate generally accurate predictions on long time customers using only first-party data, they quickly run into issues when targeting leads or recently acquired customers with very little observed behavior. 

In these cases, the model struggles to quickly generate meaningful insights, as it lacks the foundation of prior data to build from. This delay in data accumulation can significantly limit the effectiveness of campaigns until enough data has been collected.

Faraday inclusion of our third-party data eliminates this barrier by enabling you to build highly targeted customer segments right from the start. Instead of waiting months for data to accumulate, Faraday’s built-in data provides immediate insights, empowering you to craft campaigns optimized for engagement and conversion from day one. Without waiting for slow data accumulation, you can launch campaigns quickly with confidence.

## So who will actually convert? Let’s find out.

Your Klaviyo lists might still be growing, but are they optimized for conversion? Are you maximizing their value-generating potential? With Faraday, you can build a free persona model and see for yourself. Think of all the ways you could use this—better segmentation, more precise messaging, and automated journeys that actually resonate.

Klaviyo is a great start for any email marketing, but Klaviyo \+ Faraday together can take your email marketing to the next level\!

Enhance your Klaviyo lists with Faraday’s third-party data and personas to unlock deeper insights, smarter segmentation, and higher conversion rates—solving the cold start problem and optimizing your email marketing from day one.

Leveling up your Klaviyo lists with Faraday personas

If you are reading this, you are probably talking to Faraday about a potential contract and have a healthy amount of skepticism as to whether we can actually do what we say we are going to do.

And here’s the thing: you’re right to be skeptical. With tight budgets and increasing pressure to show ROI, you can't afford to bet on unproven solutions or spend countless cycles figuring out if a tool is really going to live up to the promise. You need a way to separate legitimate predictive tools from the noise.

Every week, we get to talk to dozens of CMOs, CTOs, & CEOs across industries who are trying to discern the same thing: which tools are legitimate and which ones are not. As a leader of a high profile brand, you are inundated with promises of predictive insights and transformation, but you need more than just promises – you need guarantees.

That's where our holdout evaluation comes in. It's not a proprietary methodology we invented – it's an industry-standard approach used by data scientists to validate predictive models.

**What makes us different is simple: we run this validation before you sign any contract.** Because frankly, if we can't prove we'll deliver real results for your business, we don't want to waste your time.

Below we’ve outlined what we are doing “behind the scenes” and how you can evaluate if we will add the value you need. 

## What is a holdout evaluation?

A holdout evaluation is a method for validating predictive models by comparing their predictions to real-world outcomes. We **set aside a portion of recent conversion data**—data the model has never seen before—and use it as an independent benchmark, against which predictions can be compared.

This “holdout set” acts as a real-world proving ground. It is untouched until after the predictive model has been trained. 

Meanwhile, the rest of your historical data is combined with rich third-party insights from the [Faraday Identity Graph](https://faraday.ai/docs/abstractions/traits) ([which includes 1,500 attributes on 240M+ U.S. consumers and their households](https://faraday.ai/features/faraday-identity-graph)). We use this combined data to train the new predictive model.

Training a predictive model simply means finding patterns in conversion behavior. In other words, what can we learn from your previous customers to identify future customer behavior? Once trained, the model generates predictions—scoring leads based on their likelihood to convert and only after these predictions are made do we compare them to the **real conversion rates** in the holdout set.

If the highest-scoring leads actually convert at higher rates than lower-scoring ones, the model is validated as accurate and reliable. 

Holdout evaluations ensure predictive models aren’t just theoretical—they work in the real world, using real data, to deliver real results.

## How holdout validation works at Faraday

We've streamlined this validation process to be transparent and straightforward:

1. ![customer conversion data](/images/blog/holdout_testing_diag/holdout_testing_diag-01.png)

   #### Prepare your data and set aside a holdout group

   We start with your recent [lead conversion data](https://faraday.ai/blog/first-party-vs-third-party-data-marketing). Before any processing occurs, we reserve a portion of your most recent leads as a "holdout set"—data that the model will never see during training. This ensures we have an independent benchmark for evaluating predictions.

2. ![merged with FIG](/images/blog/holdout_testing_diag/holdout_testing_diag-02.png)

   #### Combine data with Faraday Identity Graph

   With the holdout set reserved, we then combine remaining data with Faraday’s [built-in, rich  consumer data](https://faraday.ai/features/faraday-identity-graph) sourced from the Faraday Identity Graph. This expanded dataset provides a deeper view into key predictive signals, like property and demographic information, life events, buying habits, and more.

3. ![model is trained and predictions begin](/images/blog/holdout_testing_diag/holdout_testing_diag-03.png)

   #### Train the model and begin predictions

   Using this enriched dataset (excluding the holdout set), we train a predictive model to identify patterns in conversion behavior—learning from traits, behaviors, and other signals.

   Once the model is trained, it scores each lead based on its likelihood to convert, generating a ranked list of opportunities—from high-value leads to those less likely to convert.

4. ![model is validated](/images/blog/holdout_testing_diag/holdout_testing_diag-04.png)

   #### Compare predictions to reality to validate model

   Finally, we put the model to the test: we compare its predictions against the real outcomes in that untouched holdout set. If the highest-scoring leads don't convert at significantly higher rates, we go back to the drawing board.


## How to know if a holdout validation was successful

A holdout validation is considered successful when the following criteria are met:

1. **Clear correlation between predicted probability and actual conversion rates**  
   The model’s predicted likelihood to convert should directly align with the actual conversion rates. If the predictions are accurate, high-probability leads should convert at a noticeably higher rate than lower-probability ones.

2. **High-scoring leads convert at significantly higher rates**  
   The top-scoring leads should consistently perform better than those ranked lower. This demonstrates that the model is identifying truly valuable leads.

3. **Consistent performance across different customer segments**  
   The model should show reliable results across various segments—whether you’re targeting different demographics, regions, or other customer profiles. If the model works well across a broad set of data, it proves its reliability and scalability.

When a model meets these criteria, it’s ready for deployment—whether that means optimizing [lead buying](https://faraday.ai/docs/how-to/use-cases/leads), refining your [direct mail strategy](https://faraday.ai/templates/lead-suppression), or enhancing your email [personalization](https://faraday.ai/templates/personalization) approach.

## Questions you should ask us

We want you to push us on what matters most for your business. Here are key questions to evaluate if we're the right fit:

1. **How does this model's performance compare to the lift you are seeing with  similar businesses in our industry?**

   While we can’t share client specifics, we can provide insight into broader trends and expected performance benchmarks.

   → **Why this matters:** Understanding industry benchmarks helps you gauge whether predictive modeling is truly a competitive advantage for your business.

2. **How much historical data do we need for reliable predictions?**

   The answer varies by business model and conversion volume. We’ll help determine whether you have enough data—or how to supplement it if needed.

   → **Why this matters:** Predictive models work best when trained on strong data. Knowing the threshold for reliability ensures you're making data-driven decisions with confidence.

3. **What happens if the model doesn't perform as expected?**

   We have a structured iteration process to refine models when necessary, ensuring they reach meaningful predictive power.

   → **Why this matters:** No model is perfect on the first run. Understanding the process for continuous improvement ensures long-term success.

4. **How will this integrate with our existing marketing stack?**

   We’ll provide technical specs, discuss implementation timelines, and outline the resources needed to get up and running.

   → **Why this matters:** Seamless integration means faster time-to-value and less friction in your workflow.


## Why holdout evaluations work

The businesses who win this year will be those who successfully incorporate predictive modeling into their core workflows. It's no longer a nice-to-have – it's a need-to-have. But we know you can't afford to make decisions based on hunches or unproven tools. That's why we're eager to validate our value up front. 

At the end of the day, three things matter to us:

1. **Confidence before commitment:**  
   You see proof before you commit

2. **Higher marketing efficiency:** 
   Your marketing dollars go to the leads most likely to convert

3. **Stronger sales performance:** 
   Your sales team focuses on opportunities worth their time

If we can't demonstrate value, we'll be the first to tell you we're not the right fit. But if we can – and we usually do – we want you to know the exact savings or additional revenue you can expect to see over the course of the next year with Faraday. Interesting in generating value you can trust? Reach out to learn more about what we can do for your business\!

Faraday uses holdout testing to validate predictive models before you commit, ensuring they deliver real, measurable results.

Predictive modeling generates tangible value, and we can prove it

[Personalization](/blog/predictive-personalization-machine-learning) is the holy grail of growth teams everywhere. At this point, everyone knows how important it is to speak to their customers and prospects like they’re real people, and not just orders and clickstreams. It’s often easier said than done, though, and brands with a significant amount of data and a large customer base may find themselves struggling to make heads or tails of how to organize it, or even know what data is worth focusing on.

## Challenges of personalization at scale

Doing personalization at scale right can provide incredible value to your brand, and has a major impact on how your customers see and interact with you. A daunting set of challenges is presented to most brands that try to tackle the issue themselves–let’s dive into a few of the most glaring challenges.

### Data, and a lot of it

To know more about–and how to speak to–your customers, you need to have data on them. Through the data you currently have, you’ll likely have some level of insight into the demographic, financial, and transactional background of your customer base as a whole. Though this data is strong, and gives a unique perspective due to it being exclusive to your brand, your customers exist outside of interacting with your brand. A healthy mix of [first-and-third-party data](/blog/first-party-vs-third-party-data-marketing) can provide additional layers of complexity and nuance to how you view your customers–and how you engage with them.

The problem is that you need a lot of strong data to personalize meaningfully, and the more data you collect, the harder it becomes to personalize at all.

### Finding the relevant data

Collecting the data is the first step to creating an impactful strategy for personalization at scale–but what do you do with it? Historically, data-savvy marketers have sifted through the terabytes of data they’ve collected to try and piece together what makes up their ideal customer, and what their key levers are. If your brand is thorough, this is a _ton_ of data to sift through, and the process of finding what’s relevant–on the whole as well as on the individual level–is colossal.

### Personalization at scale

By using machine learning for predictive personalization, the effort involved in scaling personalization across your entire customer base–past, present, and future–isn’t as herculean as it sounds. Machine learning algorithms can segment your customers into bespoke, cohesive personas that you can deploy [anywhere in your stack](/integrations), allowing you to create individualized, personalized campaigns for any given subgroup of people you’re interested in.

### Responsibly-sourced data

Privacy is front-and-center of any data-focused discussion in 2025–as it should be. It began with the (albeit slow-rolling) [death of third-party cookies](/blog/death-of-third-party-cookies-strategies), and will continue to be a primary focus of consumers moving into the future. Privacy matters, and largely, people are uncomfortable with things like cookies–previously critical to a third-party data strategy–tracking them creepily across the web to find out what they’re searching and where they’re visiting, even if the end-result is personalized content.

The data you collect and use should be [responsibly-sourced, opt-in, and permissioned](/features/data). It’s possible to provide a perfectly personalized experience while simultaneously being a privacy-forward brand, but it takes effort.

## Benefits of personalization at scale

With the barriers to true personalization at scale being so high, is the end-result worth it? With companies that personalize collecting [40% more revenue](https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying#0) than those that don’t, the answer is a resounding _yes_.

### The right message, at the right time, every time

It’s an adage as old as marketing itself, but it’s always going to be true when a single poorly-personalized, or otherwise irrelevant message could mean the loss of a customer–or potential customer–forever. With personalized content delivered to every individual you’re engaging with, at any scale of your campaign, you’ll always be delivering the right message, at the right time, every time.

### Consumers demand personalized content

With [61% of consumers](https://www.salesforce.com/resources/research-reports/state-of-the-connected-customer/) reporting that they feel that most companies treat them as a number rather than a person, it’s clear that personalized content is near and dear to the modern consumer’s heart. As a dog lover, you wouldn’t want to receive a postcard from a pet food brand focused exclusively on cats, would you? Your customers don’t either.

### Building brand loyalty

[78% of consumers](https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying#0) say that they’re more likely to buy again from brands that personalize their content. Loyal customers are also more likely to recommend brands they love to their friends & family, ensuring that, if you focus on keeping your customers happy, they’ll return the favor by shouting your brand’s name from the rooftops. Keeping a strong base of loyal customers is key to a good [churn prevention strategy](/blog/churn-prevention-machine-learning).

## How to achieve personalization at scale

It’s clear that the benefits of personalization outweigh the challenges, but how exactly can it be achieved? There are three key pillars to successful personalization at scale, and they all focus on your customer data.

### Collect good first-party data

Data is the most important feature of propensity to buy and customer predictions. Without a strong enough foundation, the predictive models that your data science team builds won’t have enough data to predict strongly off of, leaving you with questionable-at-best insights. You’ll want a strong mix of first-and-third-party data collected through tactics like web forms, surveys, and loyalty programs, where you can _really_ draw out what makes your customers unique.

### Optimize your data with first-party data enrichment

As good as your own customer data is, your customers have more going on in their lives than you can see through their interactions with your brand. You can buy data from companies like Acxiom or Epsilon, who have been collecting data for years and years, or you can leverage assets like publicly available census data to find more about who your customers really are.

### Use AI for customer segmentation

With your data collected and enriched, you need to segment your customers into unique subgroups, or personas. It can be manually done, but the process is incredibly labor-and-time-intensive, and is prone to human error. Using [AI for customer segmentation](/predict/category/persona_assignments) takes the load off of your team, leaving you ready to personalize campaigns at any scale, create internal, [persona-based talk track alignment](/blog/sealed-lead-optimization), and more.

## How Faraday supports personalization at scale

Faraday lets you easily identify distinct personas and predict customer behavior with machine learning, unlocking powerful insights to shape better personalization strategies at scale.

### Unified, responsible data

Faraday unifies your first party customer data with detailed, opt-in, permissioned, cookieless consumer data, giving you the insights your brand needs while simultaneously being privacy-centric. Hundreds of datapoints through demographics, psychographics, financials, property information, and more to be leveraged for your customer predictions.

Consumers have adapting needs, and [65% of consumers](https://www.salesforce.com/resources/research-reports/state-of-the-connected-customer/) expect brands to adapt to them. This is a laborious task manually, but with Faraday’s built-in data always staying up-to-date, your brand can adapt alongside your customers.

### Delivering personalized messaging and creative across multiple channels and touchpoints

Faraday takes your data–combined with Faraday’s–and uses AI to segment your customers into unique subgroups, or personas, based on hundreds of datapoints.

[![Faraday customer personas](/images/blog/personalization_at_scale_guide/personalization-at-scale-guide-personas.png)](/images/blog/personalization_at_scale_guide/personalization-at-scale-guide-personas.png)

With your customer personas predicted, easily kick off campaigns by deploying your entire persona set, or a single persona, to anywhere in your stack. Every individual your brand is interested in, revealed with clear-cut traits like _dog owner_, grouped with people that share similar interests, shopping behaviors, and more.

[![Faraday prediction deployment](/images/blog/personalization_at_scale_guide/personalization-at-scale-guide-deployment.png)](/images/blog/personalization_at_scale_guide/personalization-at-scale-guide-deployment.png)

Personalization at scale has never been easier, or more accessible.

### Predicting the next best product for every individual

Alongside your customer personas, you can optionally predict the propensity, or likelihood, that any action is taken by an individual. For example, take your Emerging Adult Eli customer persona and predict the likelihood that anyone in that persona will [repeat purchase](/predict/category/repeat_purchasers), and, further, predict the next best product for them based on similar shoppers.

### Providing personalized discounts to foster customer loyalty

Personalization extends beyond the copy and creative that’s in your engagement with a given customer–it can include providing strategic discounts to customers that have, for example, made a second or third purchase. This way, your customer predictions guide you toward the people that are most likely to repeat purchase so that you can then turn around and give them _just_ the right discount they need to keep coming back.

**Ready to achieve true personalization at scale? [Create a free account](https://faraday.ai/signup).**

Consumers are demanding personalized content at an increasing rate, but personalization at scale has traditionally been out of reach for many brands. Using a customer insights platform makes true personalization at scale more accessible than ever.

The modern marketer’s guide to personalization at scale

A [ping post](https://activeprospect.com/glossary/ping-post/) is a real time lead distribution method where lead sellers send basic lead details (the "**ping**") to potential buyers, who then evaluate the lead based on predefined criteria. If a buyer decides to bid on the lead, they receive the full details (the "**post**") and complete the purchase. This system allows for fast, competitive bidding, commonly used in industries like home services, financial services, and insurance.

While this method offers efficiency, it also introduces challenges. Many businesses end up paying for leads that don’t convert, leading to wasted budget and ineffective outreach efforts. The ability to filter and score leads before purchasing them is crucial to maintaining a high return on investment (ROI) and optimizing marketing spend.

## How we use Ping Posts at Faraday

The challenge with ping-post lead buying is that companies often spend money on leads that don’t convert. At Faraday, we integrate with ActiveProspect’s [LeadConduit](https://activeprospect.com/leadconduit/) to enhance this process with predictive scoring. By applying machine learning at the ping stage, brands can bid only on high-converting prospects, filtering out low-quality leads in real time. This optimization reduces wasted spend and improves overall campaign efficiency.

Predictive scoring works by analyzing historical data, behavioral signals, and demographic attributes to assess a lead’s likelihood of converting. Thanks to the built-in  [Faraday Identity Graph](https://app.faraday.ai/traits) ([which comes preloaded with 1500+ attributes on nearly every US consumer and their households](https://faraday.ai/features/faraday-identity-graph)), our models score each lead against rich third-party data before a bid is placed instead of relying on limited seller-provided information. This creates the opportunity for businesses to make data-driven decisions in real time, ensuring they focus only on high-quality opportunities.

For example, an insurance provider purchasing thousands of leads daily might bid on any lead that meets basic criteria, but many of those leads never convert—driving up acquisition costs. If each lead costs \$10 and converts at a rate of 1 in 5, their effective customer acquisition cost (CAC) would be \$50. But not all leads are equal. By rejecting the bottom 40%—the least likely to convert—they could improve their conversion rate significantly, lowering their CAC to just $30.

In this scenario, instead of wasting budget on low-quality leads, they could acquire more customers for the same spend. With predictive lead scoring, they could make these decisions in real time, ensuring they only invest in leads with real potential.

## Even without TCPA 1:1 consent rule, better targeting still matters

[While the expected TCPA 1:1 consent rule did not go into effect earlier this year](https://faraday.ai/blog/tcpa_1-1_vacated), that doesn’t mean businesses can ignore lead quality or continue to enact spray and pray targeting in 2025\. Just because you’re not being forced to change doesn’t mean you shouldn’t. Rising acquisition costs and increasing competition make it critical to invest in leads that are both high-quality and likely to convert. Faraday’s real-time predictive scoring ensures that brands maximize their ROI while staying ahead of the curve. By leveraging AI-driven insights, lead buyers can refine their targeting strategies and remain competitive in an evolving marketplace.

Additionally, compliance concerns aren’t going away. Even without the immediate pressure of TCPA amendments, consumer privacy laws and regulations continue to evolve, and businesses that proactively refine their lead acquisition strategies will be better prepared for future changes. More rigorous lead assessment doesn’t just improve efficiency—it also reduces the risk of compliance issues and enhances the overall customer experience by ensuring outreach efforts are more relevant and targeted.

## Looking ahead

The lead generation landscape will continue to evolve, and companies that prioritize precision over volume will have the advantage. Rather than buying as many leads as possible and hoping some might convert, businesses need to shift toward smarter, data-driven strategies that optimize every dollar spent.

Faraday’s predictive lead scoring is a powerful tool for staying ahead, allowing businesses to purchase leads with confidence and efficiency. Whether regulatory shifts happen or not, the need for better targeting and smarter decision-making isn’t going away.

Ping posts are a real time lead distribution method where basic lead details are sent to potential buyers, who then decide whether to bid before receiving the full lead information.

So what is a Ping Post anyway?

Using machine learning to identify customer personas in your data can help improve your understanding of your customer base, and with the right infrastructure, deliver personalized experiences at a greater scale.

In a nutshell, the process entails using an algorithm to segment your customer data into distinct groups, or personas. Faraday uses a time-tested method called k-means clustering.

## What is k-means clustering?

K-means clustering is an unsupervised clustering algorithm that was first introduced in 1957. An unsupervised algorithm does not require the data to be labeled in order to train the model. This is an important feature of the k-means algorithm because it allows for the discovery of subgroups within the data without any previous assumptions about possible groupings — in this case, personas.

## How does k-means clustering work?

When presented with a data set, the k-means algorithm first introduces random center points around which each data point will eventually be clustered (circles, Fig. 1). Then each data point is assigned to the group of the center to which they are closest.
This happens by calculating the distance from a data point to each cluster center using an equation known as the Euclidean distance measure. For two dimensions, the Euclidean distance is represented by the diagonal line connecting the point to each of the cluster centers. The point is then assigned to the cluster center with the shortest diagonal line (Fig. 2).

Once each point has been assigned to the randomly chosen cluster centers, the centers then "update," moving to the center of the group by recalculating the mean (average) distances to all the points in the group (Fig. 3).

After the cluster centers have updated to their new positions, each point is reassigned to a new group using the Euclidean distance measure again. Most of the points will remain in their original groups, but some points will be assigned to a new group (Fig. 4). So, then the centers must be updated again to be at the center of the new group. This pattern repeats until the centers no longer move.

[![K-means diagram](/images/blog/k-means_diagram.png)](/images/blog/k-means_diagram.png)

## Using k-means clustering for customer personas

All of the above is how k-means clustering worked back in 1957. Since then there have been upgrades allowing us to use something called categorical features. At Faraday, we create persona groups using a mix of these features.

As far as algorithms go, k-means is rather straightforward, but has one major downfall: you have to tell it how many groups to look for, and it will always succeed in finding that many groups. That means if you tell the algorithm to look for 500 groups, it will find them — even if there is no reason for there to be 500 distinct groups within the data.

If you're a marketer, you probably don't want to create 500 unique ads for every campaign. But should you make four? Or six? Or ten?

## How to find the optimal number of personas using k-means clustering

We target the optimal number of groups hidden within the data, rather than guessing and hoping we are right. We’ll share a few methods we use to find the optimal number of personas for our users.

### The elbow method: finding diminishing returns

The most common metric for measuring the success of k-means clustering is called the ratio of sum of squares (rss). At Faraday, we determine the optimal number of personas by comparing the rss for k-means models with two to fourteen personas. We employ the elbow method, which shows the cutoff after which we see diminishing returns for increasing the number of personas. For most clients, the optimal number of distinct personas is usually between four and seven.

**Going beyond the elbow method**

The elbow method is simple, but it has a downside: sometimes, there just isn't a clear single point that is optimal. Maybe three personas could be optimal, maybe six, and we have to intervene based on our client’s business needs to choose one or the other as the optimal number of personas.

Additionally, while reducing variability within each group is an extremely useful way to measure k-means clustering success, it doesn't tell the whole story. We believe that an important aspect of clustered groups is stability, which isn't considered with the elbow method selection process. Our clients expect that their persona groups won't shift every time they convert a lead. This is why we are currently researching a new method for determining the optimal number of personas, which focuses on the stability of the persona group.

### The bootstrap method: focusing on stability

Our first step to assess the stability of k-means clustering involves resampling the client’s data using the bootstrap method. Like k-means clustering, bootstrapping has been around for a while – it was first [introduced in 1979 by Bradley Efron](https://projecteuclid.org/journals/annals-of-statistics/volume-7/issue-1/Bootstrap-Methods-Another-Look-at-the-Jackknife/10.1214/aos/1176344552.full). The basic idea behind bootstrapping is to take data from the pool we have, with the ability to pick the same data point multiple times. This is a method known as sampling with replacement.

The bootstrap method provides us with a powerful tool to measure how much our desired clustering outcome could change with different data. We can get a good sense of how much the personas will change with the addition of new customers. Our goal is to minimize how much influence single customers, or small groups of customers, have on the resulting personas. We want personas that remain relatively unchanged by single customers. In other words, we want more stability.

## Pulling it all together

Once we have the results from bootstrapping, we use the ratio of sum of squares again to measure just how stable the personas are. What we’re looking for is a ratio close to 1, which would indicate that there is no variability within the personas.

The stability metric for determining the optimal number of personas shows promising results for the basic examples in this blog post. At Faraday, we’re actively working on applying this methodology to the more complex persona groupings our clients rely on. Stay tuned for more developments with respect to improving our personas methodology.

Learn how machine learning is used to identify distinct clusters—or personas—in your customer data.

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