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Real-Time Analytics &
     Attribution
• Noah Powers
  – Principal Solutions Architect, Customer Intelligence, SAS

• Patty Hager
  – Analytics Manager, Content/Communication/Entertainment, SAS

• Suneel Grover
  – Solutions Architect, Integrated Marketing Analytics & Visualization, SAS
  – Adjunct Professor, Business Analytics & Data Visualization,
    New York University (NYU)
Video (Time: 1:20-5:00)

http://www.colbertnation.com/the-colbert-report-videos/408981/february-
22-2012/the-word---surrender-to-a-buyer-power?xrs=share_copy
Module 1
Information Management
      and Analytics
Information Management

“There is no better place to start than data, since
 it is the fuel needed to make insightful decisions
        that can drive your business forward.”



            Information Management

    ERP     CRM     EDW    Online   Social   Other



                  Data Sources
Information Management & Analytics

  “Being able to derive insights from data is the
 key to making smarter, fact-based decisions that
   will translate into profitable revenue growth.”

                                       Customer                 Social &
                       Predictive
    Segmentation                     Profitability &            Network
                              Analytics
                       Modeling
                                          LTV                   Analytics

        Data              Data           Data
       Quality   Information Management
                       Integration       Model
                                                                Metadata



     ERP         CRM         EDW      Online           Social        Other



                          Data Sources
The Business Analytics Challenge
DATA
DATA
DATA
       ANALYSTS
One Perspective…
Marketing Perspective
DECISIONS




DATA     ANALYTICS   INSIGHTS




INFORMATION MANAGEMENT
OUR
PERSPECTIVE
              Big Data is RELATIVE not ABSOLUTE




    Big Data
     When volume, velocity and variety of data
     exceeds an organization’s storage or
     compute capacity for accurate and timely
     decision-making
THRIVING IN THE BIG DATA ERA

            VOLUME
            VARIETY
DATA SIZE




            VELOCITY

            VALUE




                            THE
              TODAY
                          FUTURE
Which Category Are You?
                                                                                                           Strategic
                                                                                                           Data Managers
                                                                              Aspiring Data
                                                                              Managers
Competitive Advantage




                                                        Data
                                                        Collectors                                         •   Mature capabilities in data
                                                                                                               management
                                                                                                           •   Attribute data management
                        Data                                                                                   to C-suite
                                                                              •   Embrace importance of
                        Wasters                                                   data
                                                                                                           •   53% outperformed peers
                                                                                                           •   First to identify measurement
                                                                              •   Allow data to inform
                                                                                                               & data points that align with
                                                                                  strategic decisions
                                                                                                               corporate strategic goals
                                                                              •   Invest in technology
                                                                                  enablement
                                                                              •   60% put 50% of data to
                                                    •    Drowning in data         use
                                                    •    Misaligned IT and    •   Lack resources to
                        •   Underperform                 Business                 leverage data
                            financially             •    Lack resources to
                        •   Misalign IT and              leverage data
                            Business
                        •   Underuse data
                        •   Mid-levels drive data
                            strategy                                         Degree of Intelligence
Big Data Marketing Challenges (1)




Source: 2012 BRITE/NYAMA Marketing in Transition Study
Big Data Marketing Challenges (2)




Source: 2012 BRITE/NYAMA Marketing in Transition Study
Unlocking Siloed Operational Data To
      Understand Customers


               EDW


                     CRM
                                ANALYST




                                 ?
                      BILLING


                     ERP


               WEB
                                CUSTOMER
Ad Hoc Exploration & Analysis
      Can Take Weeks




                          ANALYST




                         CUSTOMER
What If We Had A Set Of Master Keys?




                             ANALYST




                             CUSTOMER
Where We Want To Get To…

   CRM Data           Integrated Marketing                Enrichment Data
                           Data Table
                      (Customer ID , 12345)
                      (Name , John Smith)
                      (Gender , M)
                      (Age , 42)
                      (Life Stage , FL)
                      (HH Income , 75K-100K)
                      (Children Ind , 1)
                      (HH Education, College)
                      (HH Value Score, Above Avg)
                      (CC Propensity, 0.57)
                      (Visit Recency, 12)
                      (Session Count, 7)
                      (Session Avg. PV, 4)
                      (Engagement, High)
                      (Content Goal, 1)
                      (Sticky Goal, 1)
Online History Data   (Session Affiliate, Org Search)   Current Session Data
Integrated Marketing Data Table

   Discovery and
                          Marketing        Analytic Modeling
     Reporting
   Data Queries         Acquisition        Predictive Analysis
OLAP Cube Discovery        CRM            Segmentation Analysis
                                            Real-Time Model
 Data Visualization   Churn / Attrition        Execution



The Integrated Marketing Table (also known as
   “Customer State Vector”) is an analytic
   approach designed for rapid retrieval of
  customer-level data from any dimension.
Why Do We Care?
                                     Act

                            Orient
                                                    YOUR
                          Decide           Decide   COMPETITIVE
  MARKET                                            ADVANTAGE
OPPORTUNITY             Orient
                                              Act
              Observe
Big Data - Why Do We Care?




Video (Time: 0:00-5:00)
http://youtu.be/CrSX97elHDA?hd=1
DECISIONS




DATA      ANALYTICS             INSIGHTS




       INFORMATION MANAGEMENT
Predictive Analytics
 “Encompasses a range of techniques for collecting,
  analyzing, and interpreting data in order to reveal
patterns, anomalies, key variables, and relationships.”

                                          Customer
      Segmentation
                         Predictive     Profitability &
                                                              Social Network
                         Modeling                               Analytics
                                             LTV

          Data               Data           Data
                                                                   Metadata
         Quality          Integration       Model



       ERP         CRM          EDW      Online           Social        Other



                             Data Sources
BIG DATA
OUR
PERSPECTIVE     THE ANALYTICS GAP

    Most organizations:
     Can‟t generate the information they need.
     Can‟t generate information fast enough to act on it.
     Continue to incur huge costs due to uninformed
      decisions and misguided strategies.


     The opportunities afforded by
   analytics have never been greater!
The Predictive Analytics Lifecycle

BUSINESS                                                                      BUSINESS
MANAGER                                        IDENTIFY /
                                              FORMULATE                       ANALYST
Domain Expert                    EVALUATE /    PROBLEM                        Data Exploration
Makes Decisions                   MONITOR                      DATA           Data Visualization
Evaluates Processes and ROI       RESULTS                   PREPARATION       Report Creation




                              DEPLOY
                              MODEL                                DATA
                                                                EXPLORATION



                                 VALIDATE
                                  MODEL                     TRANSFORM
IT SYSTEMS /                                                 & SELECT
MANAGEMENT                                    BUILD                           DATA MINER /
Model Validation                              MODEL                           STATISTICIAN
Model Deployment                                                              Exploratory Analysis
Model Monitoring                                                              Descriptive Segmentation
Data Preparation                                                              Predictive Modeling
Lifecycle Challenge…


                                                    20%
                                                    80% = :*(
                  IDENTIFY /
                 FORMULATE
    EVALUATE /    PROBLEM
     MONITOR                      DATA
     RESULTS                   PREPARATION




 DEPLOY
 MODEL                                DATA
                                   EXPLORATION



    VALIDATE                                     “Data is the number one challenge in the
     MODEL                     TRANSFORM         adoption or use of business analytics.”
                                & SELECT
                 BUILD                           Companies continue to struggle with data
                 MODEL                           accuracy, consistency, and even access.


                                                 Bloomberg BusinessWeek Survey 2011
Data Visualization & Exploration
Information Is Beautiful




http://www.ted.com/talks/david_mccandless_the_beauty_of_data_visualization.html
Video (Time: 0:00-5:10)
Digital Channel Exploration
Geographic Exploration
Mr. Data: Talk To Me Visually!
Customer Case Study: Telco

  Handset vs. Network Compatibility
  • Which customers should be upgraded to 4G?
  • Which handsets should be pushed in which region?

  Dropped Calls Analysis
  • Do dropped calls contribute to churn?
  • Are there handsets that are more likely to drop calls?

  Handset Penetration Analysis
  • Which cities have the greatest handset penetration?
  • Which handsets have the greatest ROI in each market?

  iPhone Launch Analysis
  • Which markets are being hit the hardest by your competition‟s iPhone
    launch?
  • Which cities are the responding the best to your iPhone campaign?
Customer Case Study: Telco
 Inner circle
represents %
of calls each
 switch type                                                       Total number
   carried.                                                        of drops that
                                                                   occurred over
                                                                   each handset
Outer circle                                                            type
 represents
% of drops
each switch
    type                   % of Drops is
                           the drop rate
   carried.                  for each
                              switch.




 Total calls and minutes                   Handset %s represent
 are displayed for each                      the distribution of
  individual switch by                      handset over each
          region                                   switch
Vendor Independent Report: Forrester Wave
                        Predictive Analytics And Data Mining Solutions




The Forrester Wave™: Predictive Analytics And Data Mining Solutions, Forrester Research, Inc.,
The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of Forrester Research, Inc. The Forrester Wave is a graphical representation
of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed scores, weightings, and comments. Forrester does not endorse any vendor, product, or service
depicted in the Forrester Wave. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.

                                                                                                                           © 2011, Forrester Research, Inc. Reproduction Prohibited
Predictive Analytic Marketing Applications

 Acquisition    Ad Targeting            Personalization




  Retention       Content      Experience / Engagement




                                © 2011, Forrester Research, Inc. Reproduction Prohibited
This Is What You Want




     Probability scores are the output of
  predictive models, and are an essential
ingredient to making data driven decisions

                             © 2011, Forrester Research, Inc. Reproduction Prohibited
Why Do You Want It?
                                     APPLICATION SCORING
                                     BEHAVIORAL SCORING
                                     COLLECTION SCORING



             DECISION ASSESSMENT




ANALYTICAL
LIFECYCLE




                                                           © 2011, Forrester Research, Inc. Reproduction Prohibited
Is It Hard To Do?




                © 2011, Forrester Research, Inc. Reproduction Prohibited
Now What?




            © 2011, Forrester Research, Inc. Reproduction Prohibited
No Silly…We Bring It To Life!




 Scoring is nothing
more than applying a
 formula created by
 your model to your
  customer records


                           © 2011, Forrester Research, Inc. Reproduction Prohibited
Let’s Think Bigger – What If I Could…
. . . deliver personalized offers and
services to ALL customers based
on up to the minute profiles

. . . gain first-mover advantage by
introducing new products and
services to micro market segments
that haven't been identified by
anyone

. . . evaluate the impact of
marketing campaigns hourly &
make adjustments in real-time


                                        © 2011, Forrester Research, Inc. Reproduction Prohibited
BIG Data Architecture – Game Changing!

ARCHITECTURE   HIGH-PERFORMANCE ANALYTICS FOR BIG DATA



                UNSTRUCTURED DATA
                  STRUCTURED &



                                                                                      ANALYTICAL
                                     IN-DATABASE




                                                                     ANALYTICS
                                                                                       INSIGHTS

                                      IN-MEMORY

                                          GRID                                       OPERATIONAL
                                                                                      DECISIONS




                                    DATABASE APPLIANCE




                                                         © 2011, Forrester Research, Inc. Reproduction Prohibited
Customer Case Study:


                                                                                        11
                 DEVELOPMENT
                                                                                        HRS
   EXPLORATION




                               DEPLOYMENT
                    MODEL



                                 MODEL
      DATA




                                            15% improvements
                                                   in
                                               Marketing
                                               campaigns
                                                                                      10
                                                                                      SECONDS




             GRID enabled analytics process
                  to improve marketing



                                                               © 2011, Forrester Research, Inc. Reproduction Prohibited
Big Data, Analytics, & In-Database




  http://youtu.be/TUHspP8irzQ
                                                                                48



                    Copyright © 2011, SAS Institute Inc. All rights reserved.
Segmentation
“The practice of dividing a prospect/customer base into
  groups of individuals that are similar in specific ways
 relevant to marketing, such as age, gender, interests,
                  spending habits, etc..”
                                         Customer
                         Predictive                           Social Network
     Segmentation        Modeling
                                       Profitability &
                                                                Analytics
                                            LTV

          Data              Data           Data
                                                                   Metadata
         Quality         Integration       Model



       ERP         CRM         EDW      Online           Social               Other



                            Data Sources

                                                          © 2011, Forrester Research, Inc. Reproduction Prohibited
Classic Marketing Approach: RFM




                     © 2011, Forrester Research, Inc. Reproduction Prohibited
Advanced Analytic Segmentation
Decision Trees              Clustering
(Supervised Learning)   (Unsupervised Learning)




 Business Use Case        Business Use Case
Acquisition Marketing     Marketing Strategy




                               © 2011, Forrester Research, Inc. Reproduction Prohibited
Decision Trees

• Decision trees are a form of multiple variable (or
  multiple effect) analyses
• Allow marketers to explain, describe, or classify an
  outcome
   – Use Case
      1. After analyzing Dec 2011 campaign results, we
         use Decision Trees to calculate the classification
         probability of a prospect responding to the
         acquisition campaign
      2. Score “look-a-like” prospects for Dec 2012
         campaign
Decision Tree
Data Driven Segmentation Rules




                           Segment #1
                                   #2

                        Recency Score: High
                     Engagement Score: Medium
                       Engagement Score: High
                       Age: Young Adult (25-44)
                       Affiliate: Organic Search
                             Affiliate: Email
                    Response Probability: Medium
                     Response Probability: High
Benefits Of Decision Trees
• The multiple variable analysis capability enables one to
  discover & describe outcomes in the context of multiple
  influences

• The appeal of decision trees lies in their relative power,
  ease of use, robustness with a variety of data
  and levels of measurement, and interpretability

   Bootstrap Forests    CHAID / C5 / RP     Boosted Trees
Clustering

• Marketing can use cluster analysis to partition
  prospects/customers into segments – without the
  bias of a historical consumer decision
• Understand the organic synergies between
  different groups
  – Use Case
     1. Marketing is planning a new campaign, and
        historical information is not available
     2. Tag prospects with cluster results for our Dec
        2012 campaign, and influence creative execution
Clustering

Finding groups of observations such that the observations in a
group will be similar (or related) to one another, and different
from (or unrelated) to the observations in other groups
Data Table




                      Step 2



             Step 1



                        Approach: K-Means
                       Number of Clusters: 3
Cluster #1        Cluster #2           Cluster #3
Weight Management   Guilty Pleasures   Health Management
   Diet Focused      Taste Focused          High Fiber
Benefits Of Clustering
• Segmentations arise from varied business needs &
  demands
   – Marketing vs. Sales vs. Advertising
• Integrating data streams allows greater capabilities
   – When combined, Marketing gains an increased understanding
     of customer behavior, demographics and psychographics

                                             Expectation-
       Centroid            Hierarchical
                                             Maximization
Customer Profitability & LTV
 “Customer lifetime value (CLV) is a prediction of the
net profit attributed to the entire future relationship with
                        a customer.”

                                         Customer            Social &
                          Predictive
       Segmentation
                          Modeling      Profitability        Network
                                                             Analytics
                                          & LTV
           Data              Data          Data
                                                             Metadata
          Quality         Integration      Model



        ERP         CRM         EDW      Online     Social        Other



                             Data Sources
Customer Lifetime Value & Influence




   http://youtu.be/BRhPS0-rx6I?hd=1
                                                                                62



                    Copyright © 2011, SAS Institute Inc. All rights reserved.
Value of Your Company = Value of Your Customers



    The only value your company will ever create is the
      value that comes from customers–the ones you
       have now and the ones you have in the future.
  To remain competitive, you must figure out how to keep
        your customers longer, grow them into bigger
      customers, make them more profitable and serve
                   them more efficiently.



                      By Don Peppers and Martha Rogers, Ph.D.,
                      Founding Partners, Peppers & Rogers Group
                                                                  63
Perils Of Ignoring Customer Profitability

              •   20% of the customers represent 80% turnover
              •   Some customers repeatedly contact the call-center
              •   Sales channels are incented by revenue
              •   Identification and retention of the profitable customers is a challenge
  Situation   •   Marketing campaigns segment customers without considering profitability




              •   Profitable and loyal customers are not recognized/rewarded
              •   It is not the profitable customers who are retained
              •   It is not the most profitable products which are offered to the customers
              •   Sales and call-center staff spend their time on the unprofitable customers
Consequence   •   Sale of unprofitable products result in losses and wasted resources
              •   Low return on sales and marketing activities




                                                                                               64
Competitive Advantage & Profitable Growth
Focus resources on gaining and retaining the most profitable
customers with the most relevant offers at the opportune time.
Positive & Negative Profit:                          Predict & Execute Proactively:
• Many are profitable customers                      • Identify customers most at risk
• Other customers reduce profits                     • Identify customer influence factors
• The key is to understand which     Customer        • Execute proactive customer retention
customers fall into each category
                                     Profitability

                   Revenue                           Customer
                    Growth                           Retention


                                      Customer
    Relevant conversations:
                                       Centric
    • The way the customer prefers
    • At the time they prefer

                                                                                          65
Path to Optimized Profitable Marketing

Harness customer insights that result in smarter more personalized
marketing execution to improve customer profitability.




                                       Define          Execute
                       Define
 Consolidate and                     Analytically     Optimized
                   Customer Value
    Organize                           derived         Marketing
                      and Cost
 Customer data                        Customer         Based on
                       Metrics
                                    Segmentations   Essential Insight




                                                                        66
Define Customer Value
Challenges
    Expenses are allocated with broad strokes to                 Costs         Revenue
     customer segments
    Lack of visibility into the true drivers of
     profitability
Solution: An advanced profitability costing
   and allocation engine
    A full cost view of individual customer
     profitability to uncover profit drivers and
     detractors
    Understanding the root causes of adverse
     trends for margin, revenue, and cost for
     individual customers and segments.
                                                         Profit     Retention    Potential
    Predicting future profitability including various
     scenarios for customers and segments
                                                                                  Lifetime
    Understand role and influence of social network                               Value



                                                                                             67
Costs At The Customer Level
In order to determine customer profitability in a reliable and
repeatable way, a comprehensive source of cost data at
the lowest possible level of granularity is required:
 The data should be available on product, service and customer
  level, where appropriate.
 Aggregated costs need solid decomposition algorithms, accepted by
  business and financial analysts
 Average costs might be misleading, as the same product sold to two
  different customers may have differing cost profiles
 Customer, product and service profitability are not universal and
  transferable across the entire database
 Other costs to serve should be calculated using a proven
  methodology, like Activity-Based Costing

                                                                       68
Define Analytically Derived Customer Segmentations

     Create individual segmentations for each of the profit levels
     Uncover profit drivers or profit detractors for each profit level

                      Segment Name              Description
 Top 20%
                        Most         • Uncover Why they are Most Profitable
                        Profitable   • High influencer/ leader? Usage? highest churn rate?

                        High         • Uncover Why they are Profitable
                        Value        • Is it High usage? How high is the churn rate?

                        Middle       • Determine which customers have potential to move up in profit.
Middle 70%

                                     • Learn why they have lower margins
                        Low
                                     • What is the churn rate?


Bottom 10%
                        Negative     • Determine why they are negative value?
                                                                                                        69
Accumulated Profit Curve
A smaller percentage of your customer base is driving the
majority of the profit.
                                  Migrate /
     Spend          Keep &
                                   Shift to
    to keep         migrate
                                 lower cost

                                                 May be some of
                                                  your largest
                                                   customers




  Source: Gartner
                                                                  70
Customer Profitability – The Life Cycle
    Acquisition         Development   Retention   Churn/ Win-
                                                     back
Net Margin




                                                                71
Customer Profitability – The Life Cycle
    Acquisition         Development        Retention             Churn/ Win-
                                                                    back
Net Margin




                             Decisions points during acquisition:
                              • Looking at products and offers

                              • Comparing pricing

                              • Company can be scoring - credit worthiness




                                                                               72
Customer Profitability – The Life Cycle
    Acquisition         Development            Retention         Churn/ Win-
                                                                    back

                          Decisions points during relationship
                          development:
Net Margin




                           • Service & product usage
                           • Customer user experience

                           • Cross & up-sell

                           • Bad debt detection and collection
                           • Customer service


                                                                               73
Customer Profitability – The Life Cycle
    Acquisition             Development             Retention   Churn/ Win-
                                                                   back
Net Margin




                 Decisions points during retention:
                  • Targeted retention activities

                  • Complaint handling

                  • Renewal pricing, discounting & bundling
                  • Reactive retention



                                                                              74
Customer Profitability – The Life Cycle
    Acquisition           Development           Retention          Churn/ Win-
                                                                      back
Net Margin




                   Decisions points during churn/win-back:
                    • Win-back discount and bundle pricing

                    • Trigger campaigns for future reacquisition




                                                                                 75
Examples of Elements Affecting Customer
  Lifetime Value (CLV)
                                                     -   +
(1) – Start-up of customer case

(2) + fee income

(3) – Continuing “cost to serve”

(4) + Sale of additional products, “cross-selling”

(5) – Advice
                                                                 Opportunities
(6) – Marketing                                                  Through
                                                                 Customer‟s
                                                                 “Lifetime”
(7) – Initiatives for retention of customer

(8) – Influence others to churn

= Customer         lifetime value                        = CLV

                                                                                 76
How Is Competitive Advantage Created?
                                 Retention of the profitable
                                 customers


                Profitability    Realization of the
                per customer     customers’ potential


                 Profitability   Pricing of
                 per product     products/services
                 and service     considering profitability

                                 Development of new
Insight in                       profitable products
profitability
through the     Profitability    Restructuring of
entire          per market       organization according
business        segment          to the segment’s
model                            profitability
                                 Make processes
                                 more efficient

                                                               77
Broaden Use for Profitability Metrics
    Once Profitability Metrics are calculated, the information
      can be leveraged across departments.

Sales/Marketing
• Offer Strategies
                                                                               Finance
                                                                               • Improved information for business
• Promotion strategies
                                                                                 analysis
• Product portfolio management
                                                                               • Interconnection rates
• Customer segment management
                                                                               • Cost control
• New product intro
                                                                               • Process improvement
• Channel effectiveness
                                                                               • Proper capital investment
• Marketing direction


                                 Operations
                                 • Network optimization strategy
                                 • High cost process that needs to be reengineered
                                 • Utilization review
                                 • Infrastructure decisions
                                 • Optimize contact center strategies
                                 • Prioritize service treatments
                                                                                                                     78
Case Study: Verizon
•    Business Issue: Needed to analyze
     and understand shared expenses and
     overhead costs such as sales,
     engineering, and product development
     and meaningfully allocate those costs to
     the products sold and the sales revenue
     generated. Lacked right information and
     ability to do this on a timely basis             “The cost and profitability initiative
                                                      at MCI, and subsequently Verizon
•    Results/Benefits                                 Business, supported by SAS
                                                      Activity-Based Management,
      •   Created P&Ls used to hold business
                                                      provided key information in the
          leaders accountable for financial results
                                                      transition of the business through
          by sales-channel segment profitability.
                                                      acquisition and continues to
      •   Expanded model to calculate more            provide value that only cost and
          detailed profitability information on a     profitability insight can deliver.”
          monthly and annual basis in:
      •   Channel profitability, Customer segment
          profitability, Product or service
          profitability, Cost of business processes
          and Cost of shared services (such as IT)
Social Network Analytics
“Social network analysis views social relationships in terms
   of network theory, consisting of nodes (representing
   individual actors within the network) and ties (which
       represent relationships between individuals).”

                                          Customer                  Social
                          Predictive
       Segmentation
                          Modeling
                                        Profitability &            Network
                                             LTV
                                                                   Analytics
           Data              Data           Data
                                                                   Metadata
          Quality         Integration       Model



        ERP         CRM         EDW      Online           Social        Other



                             Data Sources
T-Mobile & Social Network Analytics




   http://youtu.be/Orr5lzLul8c?hd=1
                                                                                 81



                     Copyright © 2011, SAS Institute Inc. All rights reserved.
What is Social Network Analysis (SNA)?
Overview
 The practice of identifying and
 measuring the relationship structure
 that exists between individuals within a
 social network..

 This is most commonly used in the
 telecommunications industry where
 it is used to understand the links
 formed through voice, text and picture
 messaging. Individuals can be
 differentiated by the number and nature
 of their connections to others.



                                              82
Business Value of SNA
Social Network Analysis provides both a deep and
broad understanding of customer behavior. When
combined with proven advanced analytics this enables
the development of many powerful business focused
solutions which help build strong and measurable
customer advocacy.




                                                       83
SNA Based Business Solutions
Below are examples of business solutions that rely on SNA:
 Social Network Propensity Scores
  - eg. improve churn prediction, average $, or customer advocacy.
 Persistent Individual Identification
   - Enables multi-SIM use, prepaid SIM recycling, and improved churn
   reporting.
 Customer, Household, and Life-Stage Segmentation.
 Customer Value
   - Understood in terms of relations and influence upon purchase behaviour
   of others.
 Acquisition Of High ARPU Prospects
   - And competitor customers through referral and highly targeted viral
   campaigns.
 Agile Campaigns
   - Insights and data provided which indicates when specific customer actions
   occur (enables a shift from monthly routine of mass campaigns).

                                                                                 84
Better Customer Understanding
 Most mobile providers perform customer segmentation,
  usually based upon call usage behavior or profile.
 Also predictive analytics to identify churn risk customers.
 Social Network Analysis reveals relationships and
  measures the influence customers have upon others.

 Churn
                                           Churn
                      2




                                                                85
Agile Customer Management
 Social Network Analysis is used to develop event-based
  campaigns and customer management strategies.
 Churn is an example;
  - contact friends immediately after a customer churns.
 SNA enables a move from traditional monthly batch
  analytics.
 Churn   High Risk
                     High Risk                      Churn
                         2
                                       High Risk


                                 High Risk               High Risk



                                             High Risk




                                                                     86
Community Detection
 In addition to better understanding of individual
  customers SNA can be used to create or enhance
  household segmentation by identifying communities.
 The purpose of Community Detection is to identify the
  strongest relationships within the customer base.


                     2




                                                          87
Communities Detection
 The allocation of communities need not be mutually exclusive.
  These can be hierarchical communities which may first represent
  immediate family and then extended friendships.
 Supporting hierarchical communities is essential when solving
  conflicting business goals such household segmentation (which
  requires close communities) or viral marketing (which requires
  larger communities for optimum results).


                         2




                                                                    88
Household Segmentation
 Because Community Detection finds the natural social groupings
  of all customers it is a powerful mechanism for Household
  Segmentation.
 Using analytics to combine information about social links with, for
  example, customer age, gender or location it is possible to
  accurately infer household type and customer life-stage.
                                 Male & Female Postpaid (age 40 yrs)
                                 Single Prepaid (age 19 yrs)
                                 Mature Family Segment
                          2

                                            Different Surnames
                                            Matching Address
                                            Age Group 25-30 yrs
                                            Young Couple Segment



                                                                        89
Know True Customer Value
 Customer advocacy is critically important in today‟s
  marketplace. SNA is used to track adoption and spread
  of new services and identify key influencers.
 Community detection is used to attribute $$$ value that
  is not visible at an individual customer level. Households
  that span competitor networks indicate share-of-wallet.
                                         I‟m a high value
                           2              customer on a
                                        competitor network

     I just bought                                           I influence my partner‟s
      an Android                           I‟m a highest     purchasing decisions…
                      It looks cool,      value customer
                       now I might
                     buy an Android..




                                                                                        90
Not All Links Are Created Equal
 Customer relationships can be distinguished and
  analyzed by
    Their strength (e.g. number of calls)
    Their interval class (e.g. days between calls)




                             2
                                                      We chat everyday
                                                      We chat everyday


              I‟m a high value
             We discuss sports
               customer on a
           scores on the weekend
             competitor network




                                                                         91
Identification Of Roles
 Customers are categorized by links and position within the entire
  social network (in some cases roles are relative to the community).
     Leaders: Highest number of links and centrality measures.
     Followers: Similar to Leaders, to a lesser extent. Usually directly
      connected to a Leader.
     Marginals: Similar to Followers, but not often connected to a Leader.
     Outliers: Few links and often low centrality measures.
     Bridges: Connect Communities and isolated individuals


                            2




                                                                              92
Improve Retention of “Leaders”
Capability         Marketing Action   Benefit
Identify highly    Target retention   More efficient targeting of
connected          strategies to      marketing spend.
“Leaders” within   “Leaders”.         Reduced attrition / improved
customer base.                        retention.
                                      Communications rapidly spread
                                      throughout the customer base.


                          2




                                                                      93
Improve Retention of “Followers”
Capability         Marketing Action             Benefit
Identify           Implement highly             Minimise viral churn.
“Followers”.       reactive event-driven        Efficient timing & targeting
Know when a        retention strategies for     of marketing $‟s.
“Leader” churns.   “Followers” at-risk          Reduced attrition / improved
                                                retention.


 Churn
                                                         Churn
                           2
                                          High Risk


                                    High Risk                 High Risk



                                                  High Risk




                                                                               94
Use Viral Effect For Acquisition & Growth
Capability             Marketing Action           Benefit
Identify influential   Target cross / up-sell     Understand acquisition
"Early Adopters" &     strategies to "Early       value of campaigns and
“Bridges” to better    Adopters". Leveraging      indirect outbound
understand viral       viral power of “Bridges”   communications. Improve
adoption of new        to competitor customer     timing & relevance of new
products.              bases.                     offers.


                             2




                                                                              95
Persistent Customer Identification
 By examining a customer‟s position within the social
  network it is possible to infer persistent identification even
  after churn, mobile service number, or address changes.
 This approach can, for example, also be used to identify
  Prepaid SIM recycling and multi-SIM use.
 Accurate reporting of monthly „Churn & Adds‟ numbers are
  critical to correct strategic decision making.




                                                                   96
CLA In Banking / Financial Services
 Data is different and does not capture a true social network
 Pseudo-social network (PSN) where consumers are linked if they
  transfer money to the same entities
 Effectiveness of targeting network neighbors can be attributed to
  similarity rather than to social influence




                                                                      97
SNA in banking / financial services
An analytic framework that enables marketing analysts to enhance
customer insight by identifying and incorporating consumer purchasing
similarities and their strength in profiling and segmentation.
 Use SNA derived variables to generate superior customer
  understanding and improve campaign effectiveness:
     Target those individuals that are strongly connected to key
      individuals
 Enhance campaign management process by introducing new
  consumer variables and methodology (e.g. campaign selection
  and response attribution).
 Data can be exploited in a privacy-sensitive way, since it is not
  necessary to know the identities of the connected consumers or the
  institutions that connect them



                                                                        98
Oi & Social Network Analytics




http://youtu.be/1O75bcTpb_M?hd=1
                                                                             99



                 Copyright © 2011, SAS Institute Inc. All rights reserved.
Saturday Afternoon Preview
• Know how to gain efficiencies and boost ROI with
  marketing automation.
• Recognize the keys to achieve real-time relevance in
  both inbound and outbound channels.
• Understand how to plan, prioritize and execute to
  maximize profits.
Orchestration & Interaction

                  Marketing
                  Decisions
      Multi-Channel Campaign Management
              Real-Time Decisions
             Marketing Optimization
                 Case Studies

  Information Management & Analytics

ERP    CRM       EDW       Online     Social   Other



               Data Sources
Questions?

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Module 1 Information Management and Analytics Final

  • 1. Real-Time Analytics & Attribution
  • 2. • Noah Powers – Principal Solutions Architect, Customer Intelligence, SAS • Patty Hager – Analytics Manager, Content/Communication/Entertainment, SAS • Suneel Grover – Solutions Architect, Integrated Marketing Analytics & Visualization, SAS – Adjunct Professor, Business Analytics & Data Visualization, New York University (NYU)
  • 5. Information Management “There is no better place to start than data, since it is the fuel needed to make insightful decisions that can drive your business forward.” Information Management ERP CRM EDW Online Social Other Data Sources
  • 6. Information Management & Analytics “Being able to derive insights from data is the key to making smarter, fact-based decisions that will translate into profitable revenue growth.” Customer Social & Predictive Segmentation Profitability & Network Analytics Modeling LTV Analytics Data Data Data Quality Information Management Integration Model Metadata ERP CRM EDW Online Social Other Data Sources
  • 8. DATA DATA DATA ANALYSTS
  • 11. DECISIONS DATA ANALYTICS INSIGHTS INFORMATION MANAGEMENT
  • 12. OUR PERSPECTIVE Big Data is RELATIVE not ABSOLUTE Big Data When volume, velocity and variety of data exceeds an organization’s storage or compute capacity for accurate and timely decision-making
  • 13. THRIVING IN THE BIG DATA ERA VOLUME VARIETY DATA SIZE VELOCITY VALUE THE TODAY FUTURE
  • 14. Which Category Are You? Strategic Data Managers Aspiring Data Managers Competitive Advantage Data Collectors • Mature capabilities in data management • Attribute data management Data to C-suite • Embrace importance of Wasters data • 53% outperformed peers • First to identify measurement • Allow data to inform & data points that align with strategic decisions corporate strategic goals • Invest in technology enablement • 60% put 50% of data to • Drowning in data use • Misaligned IT and • Lack resources to • Underperform Business leverage data financially • Lack resources to • Misalign IT and leverage data Business • Underuse data • Mid-levels drive data strategy Degree of Intelligence
  • 15.
  • 16. Big Data Marketing Challenges (1) Source: 2012 BRITE/NYAMA Marketing in Transition Study
  • 17. Big Data Marketing Challenges (2) Source: 2012 BRITE/NYAMA Marketing in Transition Study
  • 18. Unlocking Siloed Operational Data To Understand Customers EDW CRM ANALYST ? BILLING ERP WEB CUSTOMER
  • 19. Ad Hoc Exploration & Analysis Can Take Weeks ANALYST CUSTOMER
  • 20. What If We Had A Set Of Master Keys? ANALYST CUSTOMER
  • 21. Where We Want To Get To… CRM Data Integrated Marketing Enrichment Data Data Table (Customer ID , 12345) (Name , John Smith) (Gender , M) (Age , 42) (Life Stage , FL) (HH Income , 75K-100K) (Children Ind , 1) (HH Education, College) (HH Value Score, Above Avg) (CC Propensity, 0.57) (Visit Recency, 12) (Session Count, 7) (Session Avg. PV, 4) (Engagement, High) (Content Goal, 1) (Sticky Goal, 1) Online History Data (Session Affiliate, Org Search) Current Session Data
  • 22. Integrated Marketing Data Table Discovery and Marketing Analytic Modeling Reporting Data Queries Acquisition Predictive Analysis OLAP Cube Discovery CRM Segmentation Analysis Real-Time Model Data Visualization Churn / Attrition Execution The Integrated Marketing Table (also known as “Customer State Vector”) is an analytic approach designed for rapid retrieval of customer-level data from any dimension.
  • 23. Why Do We Care? Act Orient YOUR Decide Decide COMPETITIVE MARKET ADVANTAGE OPPORTUNITY Orient Act Observe
  • 24. Big Data - Why Do We Care? Video (Time: 0:00-5:00) http://youtu.be/CrSX97elHDA?hd=1
  • 25. DECISIONS DATA ANALYTICS INSIGHTS INFORMATION MANAGEMENT
  • 26. Predictive Analytics “Encompasses a range of techniques for collecting, analyzing, and interpreting data in order to reveal patterns, anomalies, key variables, and relationships.” Customer Segmentation Predictive Profitability & Social Network Modeling Analytics LTV Data Data Data Metadata Quality Integration Model ERP CRM EDW Online Social Other Data Sources
  • 28. OUR PERSPECTIVE THE ANALYTICS GAP Most organizations:  Can‟t generate the information they need.  Can‟t generate information fast enough to act on it.  Continue to incur huge costs due to uninformed decisions and misguided strategies. The opportunities afforded by analytics have never been greater!
  • 29. The Predictive Analytics Lifecycle BUSINESS BUSINESS MANAGER IDENTIFY / FORMULATE ANALYST Domain Expert EVALUATE / PROBLEM Data Exploration Makes Decisions MONITOR DATA Data Visualization Evaluates Processes and ROI RESULTS PREPARATION Report Creation DEPLOY MODEL DATA EXPLORATION VALIDATE MODEL TRANSFORM IT SYSTEMS / & SELECT MANAGEMENT BUILD DATA MINER / Model Validation MODEL STATISTICIAN Model Deployment Exploratory Analysis Model Monitoring Descriptive Segmentation Data Preparation Predictive Modeling
  • 30. Lifecycle Challenge… 20% 80% = :*( IDENTIFY / FORMULATE EVALUATE / PROBLEM MONITOR DATA RESULTS PREPARATION DEPLOY MODEL DATA EXPLORATION VALIDATE “Data is the number one challenge in the MODEL TRANSFORM adoption or use of business analytics.” & SELECT BUILD Companies continue to struggle with data MODEL accuracy, consistency, and even access. Bloomberg BusinessWeek Survey 2011
  • 31. Data Visualization & Exploration
  • 35. Mr. Data: Talk To Me Visually!
  • 36. Customer Case Study: Telco Handset vs. Network Compatibility • Which customers should be upgraded to 4G? • Which handsets should be pushed in which region? Dropped Calls Analysis • Do dropped calls contribute to churn? • Are there handsets that are more likely to drop calls? Handset Penetration Analysis • Which cities have the greatest handset penetration? • Which handsets have the greatest ROI in each market? iPhone Launch Analysis • Which markets are being hit the hardest by your competition‟s iPhone launch? • Which cities are the responding the best to your iPhone campaign?
  • 37. Customer Case Study: Telco Inner circle represents % of calls each switch type Total number carried. of drops that occurred over each handset Outer circle type represents % of drops each switch type % of Drops is the drop rate carried. for each switch. Total calls and minutes Handset %s represent are displayed for each the distribution of individual switch by handset over each region switch
  • 38. Vendor Independent Report: Forrester Wave Predictive Analytics And Data Mining Solutions The Forrester Wave™: Predictive Analytics And Data Mining Solutions, Forrester Research, Inc., The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of Forrester Research, Inc. The Forrester Wave is a graphical representation of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed scores, weightings, and comments. Forrester does not endorse any vendor, product, or service depicted in the Forrester Wave. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 39. Predictive Analytic Marketing Applications Acquisition Ad Targeting Personalization Retention Content Experience / Engagement © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 40. This Is What You Want Probability scores are the output of predictive models, and are an essential ingredient to making data driven decisions © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 41. Why Do You Want It? APPLICATION SCORING BEHAVIORAL SCORING COLLECTION SCORING DECISION ASSESSMENT ANALYTICAL LIFECYCLE © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 42. Is It Hard To Do? © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 43. Now What? © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 44. No Silly…We Bring It To Life! Scoring is nothing more than applying a formula created by your model to your customer records © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 45. Let’s Think Bigger – What If I Could… . . . deliver personalized offers and services to ALL customers based on up to the minute profiles . . . gain first-mover advantage by introducing new products and services to micro market segments that haven't been identified by anyone . . . evaluate the impact of marketing campaigns hourly & make adjustments in real-time © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 46. BIG Data Architecture – Game Changing! ARCHITECTURE HIGH-PERFORMANCE ANALYTICS FOR BIG DATA UNSTRUCTURED DATA STRUCTURED & ANALYTICAL IN-DATABASE ANALYTICS INSIGHTS IN-MEMORY GRID OPERATIONAL DECISIONS DATABASE APPLIANCE © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 47. Customer Case Study: 11 DEVELOPMENT HRS EXPLORATION DEPLOYMENT MODEL MODEL DATA 15% improvements in Marketing campaigns 10 SECONDS  GRID enabled analytics process to improve marketing © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 48. Big Data, Analytics, & In-Database http://youtu.be/TUHspP8irzQ 48 Copyright © 2011, SAS Institute Inc. All rights reserved.
  • 49. Segmentation “The practice of dividing a prospect/customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests, spending habits, etc..” Customer Predictive Social Network Segmentation Modeling Profitability & Analytics LTV Data Data Data Metadata Quality Integration Model ERP CRM EDW Online Social Other Data Sources © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 50. Classic Marketing Approach: RFM © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 51. Advanced Analytic Segmentation Decision Trees Clustering (Supervised Learning) (Unsupervised Learning) Business Use Case Business Use Case Acquisition Marketing Marketing Strategy © 2011, Forrester Research, Inc. Reproduction Prohibited
  • 52. Decision Trees • Decision trees are a form of multiple variable (or multiple effect) analyses • Allow marketers to explain, describe, or classify an outcome – Use Case 1. After analyzing Dec 2011 campaign results, we use Decision Trees to calculate the classification probability of a prospect responding to the acquisition campaign 2. Score “look-a-like” prospects for Dec 2012 campaign
  • 54. Data Driven Segmentation Rules Segment #1 #2 Recency Score: High Engagement Score: Medium Engagement Score: High Age: Young Adult (25-44) Affiliate: Organic Search Affiliate: Email Response Probability: Medium Response Probability: High
  • 55. Benefits Of Decision Trees • The multiple variable analysis capability enables one to discover & describe outcomes in the context of multiple influences • The appeal of decision trees lies in their relative power, ease of use, robustness with a variety of data and levels of measurement, and interpretability Bootstrap Forests CHAID / C5 / RP Boosted Trees
  • 56. Clustering • Marketing can use cluster analysis to partition prospects/customers into segments – without the bias of a historical consumer decision • Understand the organic synergies between different groups – Use Case 1. Marketing is planning a new campaign, and historical information is not available 2. Tag prospects with cluster results for our Dec 2012 campaign, and influence creative execution
  • 57. Clustering Finding groups of observations such that the observations in a group will be similar (or related) to one another, and different from (or unrelated) to the observations in other groups
  • 58. Data Table Step 2 Step 1 Approach: K-Means Number of Clusters: 3
  • 59. Cluster #1 Cluster #2 Cluster #3 Weight Management Guilty Pleasures Health Management Diet Focused Taste Focused High Fiber
  • 60. Benefits Of Clustering • Segmentations arise from varied business needs & demands – Marketing vs. Sales vs. Advertising • Integrating data streams allows greater capabilities – When combined, Marketing gains an increased understanding of customer behavior, demographics and psychographics Expectation- Centroid Hierarchical Maximization
  • 61. Customer Profitability & LTV “Customer lifetime value (CLV) is a prediction of the net profit attributed to the entire future relationship with a customer.” Customer Social & Predictive Segmentation Modeling Profitability Network Analytics & LTV Data Data Data Metadata Quality Integration Model ERP CRM EDW Online Social Other Data Sources
  • 62. Customer Lifetime Value & Influence http://youtu.be/BRhPS0-rx6I?hd=1 62 Copyright © 2011, SAS Institute Inc. All rights reserved.
  • 63. Value of Your Company = Value of Your Customers The only value your company will ever create is the value that comes from customers–the ones you have now and the ones you have in the future. To remain competitive, you must figure out how to keep your customers longer, grow them into bigger customers, make them more profitable and serve them more efficiently. By Don Peppers and Martha Rogers, Ph.D., Founding Partners, Peppers & Rogers Group 63
  • 64. Perils Of Ignoring Customer Profitability • 20% of the customers represent 80% turnover • Some customers repeatedly contact the call-center • Sales channels are incented by revenue • Identification and retention of the profitable customers is a challenge Situation • Marketing campaigns segment customers without considering profitability • Profitable and loyal customers are not recognized/rewarded • It is not the profitable customers who are retained • It is not the most profitable products which are offered to the customers • Sales and call-center staff spend their time on the unprofitable customers Consequence • Sale of unprofitable products result in losses and wasted resources • Low return on sales and marketing activities 64
  • 65. Competitive Advantage & Profitable Growth Focus resources on gaining and retaining the most profitable customers with the most relevant offers at the opportune time. Positive & Negative Profit: Predict & Execute Proactively: • Many are profitable customers • Identify customers most at risk • Other customers reduce profits • Identify customer influence factors • The key is to understand which Customer • Execute proactive customer retention customers fall into each category Profitability Revenue Customer Growth Retention Customer Relevant conversations: Centric • The way the customer prefers • At the time they prefer 65
  • 66. Path to Optimized Profitable Marketing Harness customer insights that result in smarter more personalized marketing execution to improve customer profitability. Define Execute Define Consolidate and Analytically Optimized Customer Value Organize derived Marketing and Cost Customer data Customer Based on Metrics Segmentations Essential Insight 66
  • 67. Define Customer Value Challenges  Expenses are allocated with broad strokes to Costs Revenue customer segments  Lack of visibility into the true drivers of profitability Solution: An advanced profitability costing and allocation engine  A full cost view of individual customer profitability to uncover profit drivers and detractors  Understanding the root causes of adverse trends for margin, revenue, and cost for individual customers and segments. Profit Retention Potential  Predicting future profitability including various scenarios for customers and segments Lifetime  Understand role and influence of social network Value 67
  • 68. Costs At The Customer Level In order to determine customer profitability in a reliable and repeatable way, a comprehensive source of cost data at the lowest possible level of granularity is required:  The data should be available on product, service and customer level, where appropriate.  Aggregated costs need solid decomposition algorithms, accepted by business and financial analysts  Average costs might be misleading, as the same product sold to two different customers may have differing cost profiles  Customer, product and service profitability are not universal and transferable across the entire database  Other costs to serve should be calculated using a proven methodology, like Activity-Based Costing 68
  • 69. Define Analytically Derived Customer Segmentations  Create individual segmentations for each of the profit levels  Uncover profit drivers or profit detractors for each profit level Segment Name Description Top 20% Most • Uncover Why they are Most Profitable Profitable • High influencer/ leader? Usage? highest churn rate? High • Uncover Why they are Profitable Value • Is it High usage? How high is the churn rate? Middle • Determine which customers have potential to move up in profit. Middle 70% • Learn why they have lower margins Low • What is the churn rate? Bottom 10% Negative • Determine why they are negative value? 69
  • 70. Accumulated Profit Curve A smaller percentage of your customer base is driving the majority of the profit. Migrate / Spend Keep & Shift to to keep migrate lower cost May be some of your largest customers Source: Gartner 70
  • 71. Customer Profitability – The Life Cycle Acquisition Development Retention Churn/ Win- back Net Margin 71
  • 72. Customer Profitability – The Life Cycle Acquisition Development Retention Churn/ Win- back Net Margin Decisions points during acquisition: • Looking at products and offers • Comparing pricing • Company can be scoring - credit worthiness 72
  • 73. Customer Profitability – The Life Cycle Acquisition Development Retention Churn/ Win- back Decisions points during relationship development: Net Margin • Service & product usage • Customer user experience • Cross & up-sell • Bad debt detection and collection • Customer service 73
  • 74. Customer Profitability – The Life Cycle Acquisition Development Retention Churn/ Win- back Net Margin Decisions points during retention: • Targeted retention activities • Complaint handling • Renewal pricing, discounting & bundling • Reactive retention 74
  • 75. Customer Profitability – The Life Cycle Acquisition Development Retention Churn/ Win- back Net Margin Decisions points during churn/win-back: • Win-back discount and bundle pricing • Trigger campaigns for future reacquisition 75
  • 76. Examples of Elements Affecting Customer Lifetime Value (CLV) - + (1) – Start-up of customer case (2) + fee income (3) – Continuing “cost to serve” (4) + Sale of additional products, “cross-selling” (5) – Advice Opportunities (6) – Marketing Through Customer‟s “Lifetime” (7) – Initiatives for retention of customer (8) – Influence others to churn = Customer lifetime value = CLV 76
  • 77. How Is Competitive Advantage Created? Retention of the profitable customers Profitability Realization of the per customer customers’ potential Profitability Pricing of per product products/services and service considering profitability Development of new Insight in profitable products profitability through the Profitability Restructuring of entire per market organization according business segment to the segment’s model profitability Make processes more efficient 77
  • 78. Broaden Use for Profitability Metrics Once Profitability Metrics are calculated, the information can be leveraged across departments. Sales/Marketing • Offer Strategies Finance • Improved information for business • Promotion strategies analysis • Product portfolio management • Interconnection rates • Customer segment management • Cost control • New product intro • Process improvement • Channel effectiveness • Proper capital investment • Marketing direction Operations • Network optimization strategy • High cost process that needs to be reengineered • Utilization review • Infrastructure decisions • Optimize contact center strategies • Prioritize service treatments 78
  • 79. Case Study: Verizon • Business Issue: Needed to analyze and understand shared expenses and overhead costs such as sales, engineering, and product development and meaningfully allocate those costs to the products sold and the sales revenue generated. Lacked right information and ability to do this on a timely basis “The cost and profitability initiative at MCI, and subsequently Verizon • Results/Benefits Business, supported by SAS Activity-Based Management, • Created P&Ls used to hold business provided key information in the leaders accountable for financial results transition of the business through by sales-channel segment profitability. acquisition and continues to • Expanded model to calculate more provide value that only cost and detailed profitability information on a profitability insight can deliver.” monthly and annual basis in: • Channel profitability, Customer segment profitability, Product or service profitability, Cost of business processes and Cost of shared services (such as IT)
  • 80. Social Network Analytics “Social network analysis views social relationships in terms of network theory, consisting of nodes (representing individual actors within the network) and ties (which represent relationships between individuals).” Customer Social Predictive Segmentation Modeling Profitability & Network LTV Analytics Data Data Data Metadata Quality Integration Model ERP CRM EDW Online Social Other Data Sources
  • 81. T-Mobile & Social Network Analytics http://youtu.be/Orr5lzLul8c?hd=1 81 Copyright © 2011, SAS Institute Inc. All rights reserved.
  • 82. What is Social Network Analysis (SNA)? Overview The practice of identifying and measuring the relationship structure that exists between individuals within a social network.. This is most commonly used in the telecommunications industry where it is used to understand the links formed through voice, text and picture messaging. Individuals can be differentiated by the number and nature of their connections to others. 82
  • 83. Business Value of SNA Social Network Analysis provides both a deep and broad understanding of customer behavior. When combined with proven advanced analytics this enables the development of many powerful business focused solutions which help build strong and measurable customer advocacy. 83
  • 84. SNA Based Business Solutions Below are examples of business solutions that rely on SNA:  Social Network Propensity Scores - eg. improve churn prediction, average $, or customer advocacy.  Persistent Individual Identification - Enables multi-SIM use, prepaid SIM recycling, and improved churn reporting.  Customer, Household, and Life-Stage Segmentation.  Customer Value - Understood in terms of relations and influence upon purchase behaviour of others.  Acquisition Of High ARPU Prospects - And competitor customers through referral and highly targeted viral campaigns.  Agile Campaigns - Insights and data provided which indicates when specific customer actions occur (enables a shift from monthly routine of mass campaigns). 84
  • 85. Better Customer Understanding  Most mobile providers perform customer segmentation, usually based upon call usage behavior or profile.  Also predictive analytics to identify churn risk customers.  Social Network Analysis reveals relationships and measures the influence customers have upon others. Churn Churn 2 85
  • 86. Agile Customer Management  Social Network Analysis is used to develop event-based campaigns and customer management strategies.  Churn is an example; - contact friends immediately after a customer churns.  SNA enables a move from traditional monthly batch analytics. Churn High Risk High Risk Churn 2 High Risk High Risk High Risk High Risk 86
  • 87. Community Detection  In addition to better understanding of individual customers SNA can be used to create or enhance household segmentation by identifying communities.  The purpose of Community Detection is to identify the strongest relationships within the customer base. 2 87
  • 88. Communities Detection  The allocation of communities need not be mutually exclusive. These can be hierarchical communities which may first represent immediate family and then extended friendships.  Supporting hierarchical communities is essential when solving conflicting business goals such household segmentation (which requires close communities) or viral marketing (which requires larger communities for optimum results). 2 88
  • 89. Household Segmentation  Because Community Detection finds the natural social groupings of all customers it is a powerful mechanism for Household Segmentation.  Using analytics to combine information about social links with, for example, customer age, gender or location it is possible to accurately infer household type and customer life-stage.  Male & Female Postpaid (age 40 yrs)  Single Prepaid (age 19 yrs)  Mature Family Segment 2  Different Surnames  Matching Address  Age Group 25-30 yrs  Young Couple Segment 89
  • 90. Know True Customer Value  Customer advocacy is critically important in today‟s marketplace. SNA is used to track adoption and spread of new services and identify key influencers.  Community detection is used to attribute $$$ value that is not visible at an individual customer level. Households that span competitor networks indicate share-of-wallet. I‟m a high value 2 customer on a competitor network I just bought I influence my partner‟s an Android I‟m a highest purchasing decisions… It looks cool, value customer now I might buy an Android.. 90
  • 91. Not All Links Are Created Equal  Customer relationships can be distinguished and analyzed by  Their strength (e.g. number of calls)  Their interval class (e.g. days between calls) 2 We chat everyday We chat everyday I‟m a high value We discuss sports customer on a scores on the weekend competitor network 91
  • 92. Identification Of Roles  Customers are categorized by links and position within the entire social network (in some cases roles are relative to the community).  Leaders: Highest number of links and centrality measures.  Followers: Similar to Leaders, to a lesser extent. Usually directly connected to a Leader.  Marginals: Similar to Followers, but not often connected to a Leader.  Outliers: Few links and often low centrality measures.  Bridges: Connect Communities and isolated individuals 2 92
  • 93. Improve Retention of “Leaders” Capability Marketing Action Benefit Identify highly Target retention More efficient targeting of connected strategies to marketing spend. “Leaders” within “Leaders”. Reduced attrition / improved customer base. retention. Communications rapidly spread throughout the customer base. 2 93
  • 94. Improve Retention of “Followers” Capability Marketing Action Benefit Identify Implement highly Minimise viral churn. “Followers”. reactive event-driven Efficient timing & targeting Know when a retention strategies for of marketing $‟s. “Leader” churns. “Followers” at-risk Reduced attrition / improved retention. Churn Churn 2 High Risk High Risk High Risk High Risk 94
  • 95. Use Viral Effect For Acquisition & Growth Capability Marketing Action Benefit Identify influential Target cross / up-sell Understand acquisition "Early Adopters" & strategies to "Early value of campaigns and “Bridges” to better Adopters". Leveraging indirect outbound understand viral viral power of “Bridges” communications. Improve adoption of new to competitor customer timing & relevance of new products. bases. offers. 2 95
  • 96. Persistent Customer Identification  By examining a customer‟s position within the social network it is possible to infer persistent identification even after churn, mobile service number, or address changes.  This approach can, for example, also be used to identify Prepaid SIM recycling and multi-SIM use.  Accurate reporting of monthly „Churn & Adds‟ numbers are critical to correct strategic decision making. 96
  • 97. CLA In Banking / Financial Services  Data is different and does not capture a true social network  Pseudo-social network (PSN) where consumers are linked if they transfer money to the same entities  Effectiveness of targeting network neighbors can be attributed to similarity rather than to social influence 97
  • 98. SNA in banking / financial services An analytic framework that enables marketing analysts to enhance customer insight by identifying and incorporating consumer purchasing similarities and their strength in profiling and segmentation.  Use SNA derived variables to generate superior customer understanding and improve campaign effectiveness:  Target those individuals that are strongly connected to key individuals  Enhance campaign management process by introducing new consumer variables and methodology (e.g. campaign selection and response attribution).  Data can be exploited in a privacy-sensitive way, since it is not necessary to know the identities of the connected consumers or the institutions that connect them 98
  • 99. Oi & Social Network Analytics http://youtu.be/1O75bcTpb_M?hd=1 99 Copyright © 2011, SAS Institute Inc. All rights reserved.
  • 100. Saturday Afternoon Preview • Know how to gain efficiencies and boost ROI with marketing automation. • Recognize the keys to achieve real-time relevance in both inbound and outbound channels. • Understand how to plan, prioritize and execute to maximize profits.
  • 101. Orchestration & Interaction Marketing Decisions Multi-Channel Campaign Management Real-Time Decisions Marketing Optimization Case Studies Information Management & Analytics ERP CRM EDW Online Social Other Data Sources

Editor's Notes

  1. Data wasters. These companies underperform financially, and their business and IT functions are not aligned. They collect data, but severely underuse them. Found in every industry, these companies are most likely to put a mid-level manager in charge of their data strategy.* Data collectors. These companies are submerged in data. They recognise the importance of data, but lack the resources to do anything about them, beyond storing them. They suffer from poor IT/business alignment, with nearly one-quarter maintaining that IT does not understand the importance of data; another quarter says the same of the business side. Companies in the healthcare and professional services industries are likely to be found in this category* Aspiring data managers. These companies have fully embraced the importance of big data to the future of their company. They allow data to inform strategic decisions, and invest in them aggressively. But they still lag behind the leaders. Sixty-six percent of them put only about one-half of their data to good use. Companies in the communications and retail industries are most likely to be found in this category.* Strategic data managers. This is the most advanced group of big data managers, with the most mature capabilities. Fifty-three percent of these strategic data managers say they outperformed their peers in the last fiscal year, 44% say they are on even par and only 1% say they underperformed. They are most likely to be found among manufacturing, financial services or technology companies. Strategic data managers first identify specific measurements and data points that align closely with corporate strategic goals.
  2. Tie back to IMM and foreshadow the predictive modeling, segmentation & SNA work
  3. Customer and product profitability mutually depend on each other, i.e. two customers having exactly the same product and services package may differ heavily with their profitability, also the same product sold to two different customers may cost the operator differentlyTwo flat-access-fee product users may demonstrate different attitude to the available basket of services and generate highly different product costs; Two customers generating similar revenue may utilize different services bundles;Customer, product and service profitability are not universal and transferable across the entire database; more granular profitability calculator is necessary to propose right product to right customer micro-segments
  4. Which customers are profitable?Those who keep generate positive Gross Profit*/ Net Profit ** month-after-monthThose, who’s cumulative Gross Profit/ Net Profit is already greater then Acquisition Costs (SAC) and Retention Costs (SRC)* Gross Profit (Return On Sales) = Gross Revenues from Services – Costs of Goods & Services Sold + Revenues from Interconnect and Interworking connections and messaging**Net Profit = Gross Profit – Costs to Serve (call center calls, claims, HLR & Network Costs, etc. directly related to customer activities and services used)
  5. Which customers are profitable?Those who keep generate positive Gross Profit*/ Net Profit ** month-after-monthThose, who’s cumulative Gross Profit/ Net Profit is already greater then Acquisition Costs (SAC) and Retention Costs (SRC)* Gross Profit (Return On Sales) = Gross Revenues from Services – Costs of Goods & Services Sold + Revenues from Interconnect and Interworking connections and messaging**Net Profit = Gross Profit – Costs to Serve (call center calls, claims, HLR & Network Costs, etc. directly related to customer activities and services used)
  6. Which customers are profitable?Those who keep generate positive Gross Profit*/ Net Profit ** month-after-monthThose, who’s cumulative Gross Profit/ Net Profit is already greater then Acquisition Costs (SAC) and Retention Costs (SRC)* Gross Profit (Return On Sales) = Gross Revenues from Services – Costs of Goods & Services Sold + Revenues from Interconnect and Interworking connections and messaging**Net Profit = Gross Profit – Costs to Serve (call center calls, claims, HLR & Network Costs, etc. directly related to customer activities and services used)
  7. Which customers are profitable?Those who keep generate positive Gross Profit*/ Net Profit ** month-after-monthThose, who’s cumulative Gross Profit/ Net Profit is already greater then Acquisition Costs (SAC) and Retention Costs (SRC)* Gross Profit (Return On Sales) = Gross Revenues from Services – Costs of Goods & Services Sold + Revenues from Interconnect and Interworking connections and messaging**Net Profit = Gross Profit – Costs to Serve (call center calls, claims, HLR & Network Costs, etc. directly related to customer activities and services used)
  8. Which customers are profitable?Those who keep generate positive Gross Profit*/ Net Profit ** month-after-monthThose, who’s cumulative Gross Profit/ Net Profit is already greater then Acquisition Costs (SAC) and Retention Costs (SRC)* Gross Profit (Return On Sales) = Gross Revenues from Services – Costs of Goods & Services Sold + Revenues from Interconnect and Interworking connections and messaging**Net Profit = Gross Profit – Costs to Serve (call center calls, claims, HLR & Network Costs, etc. directly related to customer activities and services used)
  9. Social Network Propensity Score - using centrality and the network structure we can generate highly predictive propensity scores.These propensity scores can be for customer actions such as churn, acquisition, prepaid to postpaid migration etc.Persistent Individual Identification- using links and calling pattern mechanisms to assign similarity scores to individuals. We can track individuals over time, even through number or address changes.The assumption/requirement is that they continue to talk to the same people/telephone numbers over time.Customer, Household, and Life-Stage Segmentation.- Using community detection, in addition to demographics (age, gender etc), location, and address information where available we can allocate customers into family segments.Customer Value - An accurate metric of value is also a product of your influence upon others. If a low value customer is highly connected and a great customer advocate they may be responsible for significant acquisition of many customers (whom may be high value) and reduces churn, and hence marketing costs for retention.Acquisition Of High ARPU Prospects - Refer-a-friend and ‘member-get-member’ offers often yield better results when you are aware of the $ value of off-network friends and the potential market share (number of off-network friends) each customer can bring.Agile Campaigns- By having customer link analytics prepared, it can be matched daily to recent churners. The next day (or even hourly) the friends or any churned customers can be contacted to prevent viral churn.