Predictive Analytics for Business and Marketing

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Predictive Analytics for Business and Marketing

  1. 1. © 2007 Prediction Impact, Inc. All rights reserved Predictive Analytics for Business, Marketing and Web Hosted by Prediction Impact, Inc. in association with the Emetrics Summit ________________________ Eric Siegel Ph.D. Prediction Impact, Inc. [email_address] (415)385-1313 Predictive Analytics for Business and Marketing
  2. 2. © 2007 Prediction Impact, Inc. All rights reserved Case Study: Direct Response <ul><li>Company overview : </li></ul><ul><ul><li>National veterans organization </li></ul></ul><ul><ul><li>Non-profit organization; fund raising </li></ul></ul><ul><li>General Objectives </li></ul><ul><ul><li>Find good donors </li></ul></ul><ul><ul><li>Recapture “lapsed” donors </li></ul></ul><ul><ul><li>Find “high dollar” donors </li></ul></ul><ul><ul><ul><li>There is often an inverse correlation between likelihood to respond and dollar amount of gift. </li></ul></ul></ul><ul><ul><li>Cost-effective fund raising—net revenue </li></ul></ul>Predictive Analytics for Business and Marketing
  3. 3. © 2007 Prediction Impact, Inc. All rights reserved Problem-Solving Session Template <ul><li>Overall strategy </li></ul><ul><ul><li>Outline of initiative and its primary phases </li></ul></ul><ul><li>Predictive modeling approach </li></ul><ul><ul><li>Prediction statement/goal </li></ul></ul><ul><ul><li>Data required </li></ul></ul><ul><ul><ul><li>Applicable segments </li></ul></ul></ul><ul><ul><ul><li>Predictors </li></ul></ul></ul><ul><ul><li>Deployment: How the model will be integrated or otherwise made use of </li></ul></ul><ul><ul><li>Business case </li></ul></ul><ul><li>Evaluation </li></ul><ul><ul><li>KPIs (a la business goals) </li></ul></ul><ul><ul><li>Final AB test; control group </li></ul></ul><ul><ul><li>Baseline method for comparison </li></ul></ul><ul><li>Challenges and bottlenecks anticipated </li></ul><ul><ul><li>Organizational </li></ul></ul><ul><ul><li>Technical </li></ul></ul>Predictive Analytics for Business and Marketing
  4. 4. © 2007 Prediction Impact, Inc. All rights reserved Problem-Solving Session #1: Retention <ul><li>Business: Web-o-Rama House of Metrics (worhm.com) </li></ul><ul><li>Year: 2012 </li></ul><ul><li>Type: B-2-B </li></ul><ul><li>Description: Web analytics services for small to medium businesses </li></ul><ul><li>Customer Breakdown: </li></ul><ul><ul><li>100k free subscribers </li></ul></ul><ul><ul><li>30k premium subscribers </li></ul></ul><ul><ul><ul><li>Credit card auto-bill monthly </li></ul></ul></ul><ul><ul><ul><li>High churn rate: 35% per year </li></ul></ul></ul><ul><li>Problem: Attrition rate has increased 20% since last quarter, while conversions have remained the same. Another team is working on increasing conversions. </li></ul>Predictive Analytics for Business and Marketing
  5. 5. © 2007 Prediction Impact, Inc. All rights reserved Summary of Killer Apps <ul><li>Increased profit with response modeling for direct marketing </li></ul><ul><ul><li>Increase response rate </li></ul></ul><ul><ul><li>Decreased spending </li></ul></ul><ul><li>Increased customer retention by predicting defection </li></ul><ul><ul><li>Retaining tenured customers </li></ul></ul><ul><ul><li>Converting first-time customer </li></ul></ul><ul><li>Increased response with targeted content </li></ul><ul><ul><li>Dynamic, behavior-based content selection </li></ul></ul><ul><ul><li>From AB selection to ABC...Z selection </li></ul></ul><ul><li>Increased sales by predicting cross-sell opportunities </li></ul><ul><ul><li>Recommendations engine </li></ul></ul><ul><ul><li>Collaborative filtering </li></ul></ul><ul><li>Increased net worth by predicting customer lifetime value (LTV) </li></ul><ul><ul><li>Higher valued acquisitions </li></ul></ul><ul><ul><li>Optimized retention targeting </li></ul></ul>Predictive Analytics for Business and Marketing
  6. 6. © 2007 Prediction Impact, Inc. All rights reserved Jellybeans Brain Teaser <ul><li>Good : red red red red red red red red red red red </li></ul><ul><li>Good : blue yellow green orange </li></ul><ul><li>Bad : black moive magenta beige turquoise fuisha </li></ul>Predictive Analytics for Business and Marketing
  7. 7. © 2007 Prediction Impact, Inc. All rights reserved How a Crystal Ball Works Predictive Analytics for Business and Marketing
  8. 8. © 2007 Prediction Impact, Inc. All rights reserved Predict This! <ul><li>Introduction </li></ul><ul><li>Data Overload </li></ul><ul><li>How Modeling Works </li></ul><ul><li>Statistical Models in Fashion </li></ul><ul><li>Modeling Methods </li></ul><ul><li>Deployment & Results </li></ul><ul><li>Conclusions </li></ul>Predictive Analytics for Business and Marketing
  9. 9. © 2007 Prediction Impact, Inc. All rights reserved Can Computers Think Predictive Analytics for Business and Marketing
  10. 10. © 2007 Prediction Impact, Inc. All rights reserved Next Steps for you <ul><li>Moving towards a predictive analytics initiative </li></ul><ul><ul><li>List your top 3 to 5 business optimization objectives </li></ul></ul><ul><ul><li>Match the list of killer apps to these objectives </li></ul></ul><ul><ul><li>Scope the data collections requirements </li></ul></ul><ul><li>Other courses </li></ul><ul><ul><li>The Modeling Agency's Level II and III Training </li></ul></ul><ul><ul><li>Tools courses, such as Salford Systems </li></ul></ul><ul><ul><li>These courses go beyond business apps to include science and engineering </li></ul></ul>Predictive Analytics for Business and Marketing
  11. 11. © 2007 Prediction Impact, Inc. All rights reserved Recommended References Sources <ul><li>Prediction Impact’s bi-annual email newsletter: Case studies, articles, events. Click “subscribe” at www.PredictionImpact.com . </li></ul><ul><li>www.KDnuggets.com : A comprehensive online reference and newsletter. </li></ul><ul><li>The UCI KDD Database Repository ( kdd.ics.uci.edu ): the most popular site for datasets used for research in machine learning and knowledge discovery. But all the core references such as this are found under KDnuggets, above. </li></ul><ul><li>The Cartoon Guide to Statistics , L. Gonick and W. Smith. </li></ul><ul><li>Data Mining: Practical Machine Learning Tools and Techniques with Java Implementations , E. Frank and I.H. Witten. </li></ul><ul><li>Database marketing books for preliminary steps towards modeling, and for a more holistic, less technical marketing viewpoint: </li></ul><ul><ul><li>Strategic Database Marketing, Arthur Hughes </li></ul></ul><ul><ul><li>See JimNovo.com for his “ Drilling Down ” book (first 9 chapters for free) </li></ul></ul><ul><ul><li>Email Marketing by the Numbers, Chris Baggott </li></ul></ul>Predictive Analytics for Business and Marketing
  12. 12. © 2007 Prediction Impact, Inc. All rights reserved Predictive Analytics and Data Mining <ul><li>Services: </li></ul><ul><ul><li>Defining analytical goals & sourcing data </li></ul></ul><ul><ul><li>Developing predictive models </li></ul></ul><ul><ul><li>Designing and architecting solutions for model deployment </li></ul></ul><ul><ul><li>&quot;Quick hit&quot; proof-of-concept pilot projects </li></ul></ul><ul><li>Training programs: </li></ul><ul><ul><li>Public seminars: Two days, in San Francisco and other locations </li></ul></ul><ul><ul><li>On-site training options: Flexible, specialized </li></ul></ul><ul><ul><li>Instructor: Eric Siegel, Ph.D., President, 15 years of data mining, experienced consultant, award-winning Columbia professor </li></ul></ul><ul><ul><li>Training participants: Boeing, Corporate Express, Compass Bank, Hewlett-Packard, Liberty Mutual, Merck, MITRE, Monster.com, NASA, Qwest, SAS, U.S. Census Bureau, Yahoo! </li></ul></ul>Predictive Analytics for Business and Marketing
  13. 13. © 2007 Prediction Impact, Inc. All rights reserved Predictive Analytics and Data Mining <ul><li>Applications: </li></ul><ul><li>Response modeling for direct marketing </li></ul><ul><li>Product recommendations </li></ul><ul><li>Dynamic content, email and ad selection </li></ul><ul><li>Customer retention </li></ul><ul><li>Strategic segmentation </li></ul><ul><li>Security </li></ul><ul><ul><li>Fraud discovery </li></ul></ul><ul><ul><li>Intrusion detection </li></ul></ul><ul><ul><li>Risk mitigation </li></ul></ul><ul><ul><li>Malicious user behavior identification </li></ul></ul><ul><li>Cutting-edge research for groundbreaking data mining initiatives </li></ul><ul><li>Verticals: </li></ul><ul><li>Online business: Social networks, entertainment, retail, dating, job hunting </li></ul><ul><li>Telecommunications </li></ul><ul><li>Financial organizations </li></ul><ul><li>A fortune 100 technology company </li></ul><ul><li>Non-profits </li></ul><ul><li>High-tech startups </li></ul><ul><li>Direct marketing, catalogue retail </li></ul>Predictive Analytics for Business and Marketing
  14. 14. © 2007 Prediction Impact, Inc. All rights reserved Predictive Analytics and Data Mining <ul><li>Team of several senior consultants: </li></ul><ul><li>Experts in predictive modeling for business and marketing </li></ul><ul><li>Relevant graduate-level degrees </li></ul><ul><li>Communication in business terms </li></ul><ul><li>Complementary analytical specialties and client verticals </li></ul><ul><li>Published in research journals and industrials </li></ul><ul><li>Extended network of many more: </li></ul><ul><li>Closely collaborating partner firms </li></ul><ul><li>East coast coverage </li></ul>Eric Siegel, Ph.D., President Prediction Impact, Inc. San Francisco, California [email_address] (415) 385-1313 For our bi-annual newsletter , click “subscribe” : www.PredictionImpact.com To receive notifications of training seminars: [email_address] Predictive Analytics for Business and Marketing

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