Art of Predictive Analytics_ IEGroup_predictive analytics summit_fractal analytics

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Fractal Analytic's co-founder and CEO Srikanth Velamakanni speaks at The IE Group's Predictive Analytics Summit in San Diego on February 23, 2012. Get a glimpse into the art of problem solving, where tossing Big Data into tools isn't enough to get the insights you need to drive business results.

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Art of Predictive Analytics_ IEGroup_predictive analytics summit_fractal analytics

  1. 1. ® The Art of Predictive Analytics The IE Group Predictive Analytics Summit San Diego, February 23rd, 2012 Srikanth Velamakanni Co-founder and CEO Fractal AnalyticsProprietary Information of Fractal Analytics Inc.This document contains proprietary and confidential information of Fractal Analytics and subsidiaries (Fractal) and shall not be reproduced or transferred to other documents,disclosed to others or used for any purpose other than that for which it is furnished, without the prior written consent of Fractal. It shall be returned to Fractal upon request.
  2. 2. ®“I think they are pregnant” 2
  3. 3. ® How companies learn your secrets Feb 16, 2012 Targeted offers can be decided by studying consumption patterns to figure out what you like, what you need, and which coupons are most likely to make you happy Target was “able to identify about 25 products that, when analyzed together, allowed them to assign each shopper a ‘pregnancy prediction’ score. “Take a fictional Target shopper named Jenny Ward, who is 23, lives in Atlanta and in March bought cocoa-butter lotion, a purse large enough to double as a diaper bag, zinc and magnesium supplements and a bright blue rug. There’s, say, an 87 percent chance that she’s pregnant and that her delivery date is sometime in late August. ” NY Times Resultant Offer: Create personalized booklets for products such as diapers, rattles, strollersConfidential | Copyright © Fractal 2012 3
  4. 4. ® Conceptual Architecture Customer Intelligence Product Intelligence Offer Intelligence • Life Stage & Life Events • Competitive Pricing • Offer ROI • Preferences • Historical Price Sensitivity • Offer Responsiveness • Segment Labels • Offers & Responsiveness • Offer Attractiveness • Response Propensities • PLC Stage • Offer Repository • Role of Product Campaign Intelligence Experimentation Center • Business Rules • Channel Capacity Offer Design • Test & Learn • Customer Engagement Campaign Optimization • A/B Testing • Event Based Marketing • Behavioral Economics Targeted Offer Controllable Non Controllable Influences Influences • Trade Promotions Transactions • Competition • Advertising • Weather • Circulars & Catalogues • Seasonality • Merchandizing • Macroeconomic Factors Analytics EngineConfidential | Copyright © Fractal 2012 4
  5. 5. ® Scaling this to all productsMachine Learning Manuallyseeded forAlgorithm Algorithm Seeded Brands*Products Best Better GoodShoppers Algorithm determined High Medium LowPattern Matching WEEK - 3 WEEK - 2 WEEK - 1 WEEK Washer Dryer Packing Boxes P(move in next 2 weeks) = 0.9 Carpet Bath accessories Confidential | Copyright © Fractal 2012 5
  6. 6. ® Key Insights tools won’t teach Novice tool users are more likely to buy expensive tools but they buy inexpensive tool accessories Brand agnostic shoppers have 40% of their apparel spends concentrated during the holiday period Movers spend 4 times their average weekly spend in each of the 5 weeks leading up to the moveConfidential | Copyright © Fractal 2012 6
  7. 7. ®What does it take to win?• Scale solutions• Develop deep consumer understanding• Leverage visual storytelling• Persevere
  8. 8. ® Choice Architecture Matters Offer Design 1 Offer Design 2 16% 68% 0% 84% 32%Confidential | Copyright © Fractal 2012 8
  9. 9. ®Priming shoppers
  10. 10. ®How much would you pay for a live performance? 10
  11. 11. ®Which one would you prefer to have at home? The Woman Taken in Adultery, Johannes Vermeer Denis Dutton - "The value of an artwork is rooted in assumptions about the human performance underlying its creation."
  12. 12. ® Visual storytellingConfidential | Copyright © Fractal 2012 12
  13. 13. ®Can one picture capture the vital insights? Recommended Two Cutoff Strategy α -Scorecard 35% 100% 90% 30% 80% 25% 70% Bad Rates 20% 60% 50% 15% 40% 10% 30% 20% 5% 10% 0% 0% 0 100 200 300 400 500 600 700 800 900 1000 1100 Application Score Bad Rate of Rejected Customers (E) Bad Rate of Approved Customers (E) Approval Rate at this Cutoff score Two Cutoff Strategy Current approval Rate
  14. 14. ®Visual storytelling
  15. 15. ® Institutionalizing Analytics is a long journey, but well worth the investment Cholera outbreak in London, 1854, John Snow Contaminated Pump Pump Cholera DeathConfidential | Copyright © Fractal 2012 15
  16. 16. ®Newspaper test! The Tesco Direct site advertises the kit with the words, "Unleash the sex kitten inside...simply extend the Peekaboo pole inside the tube, slip on the sexy tunes and away you go!
  17. 17. ® How to target without being evil Targeting vulnerable segments Target: KIDS Reality: Product falls into the high-fat category and the only vegetable it contains is corn Sugar Free doesn’t mean calorie freeConfidential | Copyright © Fractal 2012 17
  18. 18. ®Principles• The Golden Rule of reciprocity• Full disclosure – 100% transparency• Provide control to the consumer• Don’t manipulate – Align perception with reality 18
  19. 19. ®We believe analytics is critical to deeply connect with consumers, earn customer loyalty, make better decisions toreduce waste, and ultimately improve lives. Fortune 500 companies partner with Fractal to build breakthrough analyticsolutions, set up analytical centers of excellence, and create a culture of data driven decisioning.We solve problems, operationalize solutions to drive results, and ultimately drive change in organizations towards fact-based decisioning. We help businesses: (a) Understand, predict and influence consumer behavior; (b) Improvemarketing, pricing, supply chain, risk and claims management; (c) Harmonize data, visualize information, builddashboards and forecast business performance. www.fractalanalytics.com United States | United Kingdom | Singapore | India For further details contact: Srikanth Velamakanni srikanth@fractalanalytics.com

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