Are all features created and in the right class?We will use mainly dplyr in this section.

Side Note – Data Manipulation with dplyr, tidyr, lubridate (time-series), stringr (text), and forcats (categorical) is taught in-depth (Weeks 2 and 3, 60+ lessons, 2 Challenges) in our Business Analysis with R course.

3.

5.

1 Check for Missing DataThe next series of operations calculates the count of missing values in each column with map(~ sum(is.

na(.

))), converts to long format with gather(), and arranges descending with arrange().

Side Note – We teach these functions and techniques in Week 2 of Business Analysis with R course.

control_tbl %>% map_df(~ sum(is.

na(.

))) %>% gather(key = "feature", value = "missing_count") %>% arrange(desc(missing_count))Key Point: We have 14 days of missing observations that we need to investigateLet’s see if the missing data (NA) is consistent in the experiment set.

experiment_tbl %>% map_df(~ sum(is.

na(.

))) %>% gather(key = "feature", value = "missing_count") %>% arrange(desc(missing_count))Key Point: The count of missing data is consistent (a good thing).

We still need to figure out what’s going on though.

Let’s see which values are missing using the filter().

control_tbl %>% filter(is.

na(Enrollments))Key Point: We don’t have Enrollment information from November 3rd on.

We will need to remove these observations.

3.

5.

2 Check Data FormatWe’ll just check the data out, making sure it's in the right format for modeling.

control_tbl %>% glimpse()Key Points:Date is in character format.

It doesn’t contain year information.

Since the experiment was only run for 37 days, we can only realistically use the “Day of Week” as a predictor.

The other columns are all numeric, which is OK.

We will predict the number of Enrollments (regression) (taught in Week 6 of Business Analysis with R course)Payments is an outcome of Enrollments so this should be removed.

3.

6 Format DataNow that we understand the data, let’s put it into the format we can use for modeling.

We’ll do the following:Combine the control_tbl and experiment_tbl, adding an “id” column indicating if the data was part of the experiment or notAdd a “row_id” column to help for tracking which rows are selected for training and testing in the modeling sectionCreate a “Day of Week” feature from the “Date” columnDrop the unnecessary “Date” column and the “Payments” columnHandle the missing data (NA) by removing these rows.

Shuffle the rows to mix the data up for learningReorganize the columnsHere is the full transformation in one dplyr pipe.

Notice that this entire series of operations is concise and readable.

We teach how to do Data Manipulation and Cleaning throughout our Business Analysis with R course.

This is the most important skill for a data scientist because it’s where you will spend about 60%-80% of your time.

set.

seed(123) data_formatted_tbl <- control_tbl %>% # Combine with Experiment data bind_rows(experiment_tbl, .

id = "Experiment") %>% mutate(Experiment = as.

numeric(Experiment) – 1) %>% # Add row id mutate(row_id = row_number()) %>% # Create a Day of Week feature mutate(DOW = str_sub(Date, start = 1, end = 3) %>% factor(levels = c("Sun", "Mon", "Tue", "Wed", "Thu", "Fri", "Sat")) ) %>% select(-Date, -Payments) %>% # Remove missing data filter(!is.

na(Enrollments)) %>% # Shuffle the data (note that set.

seed is used to make reproducible) sample_frac(size = 1) %>% # Reorganize columns select(row_id, Enrollments, Experiment, everything()) data_formatted_tbl %>% glimpse()3.

7 Training and Testing SetsWith the data formatted properly for analysis, we can now separate into training and testing sets using an 80% / 20% ratio.

We can use the initial_split() function from rsample to create a split object, then extracting the training() and testing() sets.

set.

seed(123) split_obj <- data_formatted_tbl %>% initial_split(prop = 0.

8, strata = "Experiment") train_tbl <- training(split_obj) test_tbl <- testing(split_obj)We can take a quick glimpse of the training data.

It’s 38 observations randomly selected.

train_tbl %>% glimpse()And, we can take a quick glimpse of the testing data.

It’s the remaining 8 observations.

test_tbl %>% glimpse()3.

8 Implement Machine Learning AlgorithmsWe’ll implement the new parsnip R package.

For those unfamiliar, here are some benefits:Interfaces with all of the major ML packages: glmnet, xgboost, sparklyr, and more!Works well with the tidyverse (i.

e.

tibbles)Simple API makes Machine Learning easyFor those that want to learn parsnip, we’ve created a 5-hour training that’s available in Week 6 of our Business Analysis with R course.

You will learn:Linear Regression (and the impact of Feature Engineering)GLM (Elastic Net)Decision TreesRandom ForestsXGBoostSupport Vector MachinesOur strategy will be to implement 3 modeling approaches:Linear Regression — Linear, Explainable (Baseline)Decision TreePros: Non-Linear, Explainable.

Cons: Lower Performance3.

XGBoostPros: Non-Linear, High PerformanceCons: Less Explainable3.

8.

1 Linear Regression (Baseline)We’ll create the linear regression model using the linear_reg() function setting the mode to “regression”.

We use the set_engine() function to set the linear regression engine to lm() from the stats library.

Finally, we fit() the model to the training data specifying “Enrollments” as our target.

We drop the “row_id” field from the data since this is a unique ID that will not help the model.

model_01_lm <- linear_reg("regression") %>% set_engine("lm") %>% fit(Enrollments ~ .

, data = train_tbl %>% select(-row_id))Next, we can make predictions on the test set using predict().

We bind the predictions with the actual values (“Enrollments” from the test set).

Then we calculate the error metrics using metrics() from the yardstick package.

We can see that the model is off by about +/-19 Enrollments on average.

# knitr::kable() used for pretty tables model_01_lm %>% predict(new_data = test_tbl) %>% bind_cols(test_tbl %>% select(Enrollments)) %>% metrics(truth = Enrollments, estimate = .

pred) %>% knitr::kable()We can investigate the predictions by visualizing them using ggplot2.

After formatting and plotting the data, we can see that the model had an issue with Observation 7, which is likely the reason for the low R-squared value (test set).

Ok, so the most important question is what’s driving the model.

We can use the tidy() function from the broom package to help.

This gets us the model estimates.

We can arrange by “p.

value” to get an idea of how important the model terms are.

Clicks, Pageviews, and Experiment are judged strong predictors with a p-value less than 0.

05.

However, we want to try out other modeling techniques to judge this.

We note that the coefficient of Experiment is -17.

6, and because the term is binary (0 or 1) this can be interpreted as decreasing Enrollments by -17.

6 per day when the Experiment is run.

linear_regression_model_terms_tbl <- model_01_lm$fit %>% tidy() %>% arrange(p.

value) %>% mutate(term = as_factor(term) %>% fct_rev()) # knitr::kable() used for pretty tables linear_regression_model_terms_tbl %>% knitr::kable()We can visualize the importance by separating “p.

values” of 0.

05 with a red dotted line.

Key Points:Our model is on average off by +/-19 enrollments (means absolute error).

The test set R-squared is quite low at 0.

06.

We investigated the predictions to see if there is anything that jumps out at us.

The model had an issue with observation 7, which is likely throwing off the R-squared value.

We investigated feature importance.

Clicks, Pageviews, and Experiment are the most important features.

Experiment is 3rd, with a p.

value 0.

026.

Typically this is considered significant.

We can also see the term coefficient for Experiment is -17.

6 indicating as decreasing Enrollments by -17.

6 per day when the Experiment is run.

Before we move onto the next model, we can set up some helper functions to reduce repetitive code.

3.

8.

2 Helper FunctionsWe’ll make some helper functions to reduce repetitive code and increase readability.

Side-Note — We teach how to create functions and perform iteration in Week 5 of our Business Analysis with R course.

First, we’ll make a simplified metric reporting function, calc_metrics().

calc_metrics <- function(model, new_data) { model %>% predict(new_data = new_data) %>% bind_cols(new_data %>% select(Enrollments)) %>% metrics(truth = Enrollments, estimate = .

pred) }Next, we can make a simplified visualization function, plot_predictions().

See original article forthe plot_predictions()code snippet3.

8.

3 Decision TreesDecision Trees are excellent models that can pick up on non-linearities and often make very informative models that compliment linear models by providing a different way of viewing the problem.

We teach Decision Trees in Week 6 of Business Analysis with R course.

We can implement a decision tree with decision_tree().

We’ll set the engine to “rpart”, a popular decision tree package.

There are a few key tunable parameters:cost_complexity: A cutoff for model splitting based on increase in explainabilitytree_depth: The max tree depthmin_n: The minimum number of observations in terminal (leaf) nodesThe parameters selected for the model were determined using 5-fold cross validation to prevent over-fitting.

This is discussed in Important Considerations.

We teach 5-Fold Cross Validation in our Advanced Modeling Course — Data Science for Business with R (DS4B 201-R).

model_02_decision_tree <- decision_tree( mode = "regression", cost_complexity = 0.

001, tree_depth = 5, min_n = 4) %>% set_engine("rpart") %>% fit(Enrollments ~ .

, data = train_tbl %>% select(-row_id))Next, we can calculate the metrics on this model using our helper function, calc_metrics().

The MAE of the predictions is approximately the same as the linear model at +/-19 Enrollments per day.

# knitr::kable() used for pretty tables model_02_decision_tree %>% calc_metrics(test_tbl) %>% knitr::kable()We can visualize how it's performing on the observations using our helper function, plot_predictions().

The model is having issues with Observations 1 and 7.

model_02_decision_tree %>% plot_predictions(test_tbl) + labs(title = "Enrollments: Prediction vs Actual", subtitle = "Model 02: Decision Tree")And finally, we can use rpart.

plot() to visualize the decision tree rules.

Note that we need to extract the underlying “rpart” model from the parsnip model object using the model_02_decision_tree$fit.

See original article for code.

Interpreting the decision tree is straightforward: Each decision is a rule, and Yes is to the left, No is to the right.

The top features are the most important to the model (“Pageviews” and “Clicks”).

The decision tree shows that “Experiment” is involved in the decision rules.

The rules indicate a when Experiment >= 0.

5, there is a drop in enrollments.

Key Points:Our new model has roughly the same accuracy to +/-19 enrollments (MAE) as the linear regression model.

Experiment shows up towards the bottom of the tree.

The rules indicate a when Experiment >= 0.

5, there is a drop in enrollments.

3.

8.

4 XGBoostThe final model we’ll implement is an xgboost model.

Several key tuning parameters include:mtry: The number of predictors that will be randomly sampled at each split when creating the tree models.

trees: The number of trees contained in the ensemble.

min_n: The minimum number of data points in a node that are required for the node to be split further.

tree_depth: The maximum depth of the tree (i.

e.

number of splits).

learn_rate: The rate at which the boosting algorithm adapts from iteration-to-iteration.

loss_reduction: The reduction in the loss function required to split further.

sample_size: The amount of data exposed to the fitting routine.

Understanding these parameters is critical to building good models.

We discuss each of these parameters in depth while you apply the XGBoost model in our Business Analysis with R course.

The parameters selected for the model were determined using 5-fold cross validation to prevent over-fitting.

This is discussed in Important Considerations.

We teach 5-Fold Cross Validation in our Advanced Modeling Course — Data Science for Business with R.

set.

seed(123) model_03_xgboost <- boost_tree( mode = "regression", mtry = 100, trees = 1000, min_n = 8, tree_depth = 6, learn_rate = 0.

2, loss_reduction = 0.

01, sample_size = 1) %>% set_engine("xgboost") %>% fit(Enrollments ~ .

, data = train_tbl %>% select(-row_id))We can get the test set performance using our custom calc_metrics() function.

We can see that the MAE is 11.

5 indicating the model is off by on average 11.

5 enrollments per day on the test set.

# knitr::kable() used for pretty tables model_03_xgboost %>% calc_metrics(test_tbl) %>% knitr::kable()We can visualize how it's performing on the observations using our helper function, plot_predictions().

We can see that it’s performing better on Observation 7.

We want to understand which features are important to the XGBoost model.

We can get the global feature importance from the model by extracting the underlying model from the parsnip object using model_03_xgboost$fit and piping this into the function xgb.

importance().

xgboost_feature_importance_tbl <- model_03_xgboost$fit %>% xgb.

importance(model = .

) %>% as_tibble() %>% mutate(Feature = as_factor(Feature) %>% fct_rev()) xgboost_feature_importance_tbl %>% knitr::kable()Next, we can plot the feature importance.

We can see that the model is largely driven by Pageviews and Clicks.

The information gain is 93% from Pageviews and Clicks combined.

Experiment has about a 7% contribution to information gain, indicating it’s still predictive (just not nearly as much as Pageviews).

This tells a story that if Enrollments are critical, Udacity should focus on getting Pageviews.

This tells a story that if Enrollments are critical, Udacity should focus on getting Pageviews.

Key Points:The XGBoost model error has dropped to +/-11 Enrollments.

The XGBoost shows that Experiment provides an information gain of 7%The XGBoost model tells a story that Udacity should be focusing on Page Views and secondarily Clicks to maintain or increase Enrollments.

The features drive the system.

3.

10 Business Conclusions — Key Benefits to Machine LearningThere are several key benefits to performing A/B Testing using Machine Learning.

These include:Understanding the Complex System — We discovered that the system is driven by Pageviews and Clicks.

Statistical Inference would not have identified these drivers.

Machine Learning did.

Providing a direction and magnitude of the experiment — We saw that Experiment = 1 drops enrollments by -17.

6 Enrollments Per Day in the Linear Regression.

We saw similar drops in the Decision Tree rules.

Statistical inference would not have identified magnitude and direction.

Only whether or not the Experiment had an effect.

What Should Udacity Do?If Udacity wants to maximimize enrollments, it should focus on increasing Page Views from qualified candidates.

Page Views is the most important feature in 2 of 3 models.

If Udacity wants alert people of the time commitment, the additional popup form is expected to decrease the number of enrollments.

The negative impact can be seen in the decision tree (when Experiment <= 0.

5, Enrollments go down) and in the linear regression model term (-17.

6 Enrollments when Experiment = 1).

Is this OK?.It depends on what Udacity’s goals are.

But this is where the business and marketing teams can provide their input developing strategies to maximize their goals — More users, more revenue, and/or more course completions.

Two important further considerations when implementing an A/B Test using Machine Learning are:How to Improve Modeling PerformanceThe need for Cross-Validation for Tuning Model Parameters3.

11.

1 How to Improve Modeling PerformanceA different test setup would enable significantly better understanding and modeling performance.

Why?The data was AGGREGATED — To truly understand customer behavior, we should run the analysis on unaggregated data to determine probability of an individual customer enrolling.

There are NO features related to the Customer in the data set — The customer journey and their characteristics are incredibly important to understanding complex purchasing behavior.

Including GOOD features is the best way to improving model performance, and thus insights into customer behavior.

3.

11.

2 Need for Cross-Validation for Tuning ModelsIn practice, we need to perform cross-validation to prevent the models from being tuned to the test data set.

This is beyond the scope of this tutorial, but is taught in our Advanced Machine Learning Course — Data Science For Business with R DS4B 201-R.

The parameters for the Decision Tree and XGBoost Models were selected using 5-Fold Cross Validation.

The results are as follows.

Model MAE (Average 5-Fold CV) Linear Regression 16.

2 XGBoost 16.

2 Decision Tree 19.

2It’s interesting to note that the baseline Linear Regression model had as good of performance (average cross-validation MAE) as XGBoost.

This is likely because we are dealing with a simple data set with only a few features.

As we build a better test setup that includes the model performance-boosting recommendations in 3.

11.

1, I expect that the XGBoost model will quickly take over as the system complexity increases.

4.

0 Parting Thoughts and Learning RecommendationThis tutorial scratches the surface of how machine learning can benefit A/B Testing and other multi-million dollar business problems including:Customer ChurnEmployee AttritionBusiness ForecastingThe key is understanding how to construct business problems in the format needed to apply Machine Learning.

We teach these skills at Business Science University.

The 2 courses that will accelerate your data science knowledge are:Business Analysis with R Course (101) — Designed for beginners and intermediate students.

Week 6 covers Modeling and Machine Learning Algorithms, which has 44 lessons and 5-hours of video that teaches how to perform machine learning for business using the parsnip package (used in this tutorial).

Data Science For Business with R Course (201) — Designed for advanced students that want to learn business consulting combined with advanced data science.

Automatic Machine Learning, Cross Validation, and Hyper Parameter Tuning are covered in our advanced machine learning course, Week 5, which covers machine learning with H2O.

The 2 Courses are integrated and accelerate you along your data science journey.

We condense years of learning into weeks, which is why the program is so effective.

For those that need to learn both beginner and advanced machine learning, we have a Special 101 + 201 Bundle that provides both at an attractive value.

Learn 101 and 201 Combined — Accelerate Your Career TodayOriginally published at www.

business-science.

io on March 11, 2019.

.