Customer Intelligenc

Customers
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Look Inside your Customers
Customer Intelligence & Analytical CRM

WWW.CUSTOMERS-DNA.COM FREE Presentation - July 2010
Customers
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Customer Insight & Marketing
Overall CRM Framework
1.Voiceofthecustomerastoppriority 3. Dynamic segmentation andcustomer value 4. Customerretention &development 5.Multiwave,multi channelcampaigns
2. Customer Insight
6. Continuous improvement strategy
7.Organization process,programs,KPIs,incentives 8.ITarchitectureandinvestmentprioritization 9.Implementationapproach Doit,Tryit,Fixit 10.Newproductdevelopment CRMinput

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Customer Insight for CRM
TYPEOFINSIGHT
CRM
Example of insight Propensity to churn by customer Drivers of customer value Likely actions to drive crosssell/up-sell Drivers of downward migration
Typical methodology used to generate insight Data mining Targeted research
Customer insight
Newproduct development
Unfulfilled needs Willingness to pay for new product/service offering
Focus groups Quantitative research
Branding
Needs and behaviors by segment Media consumption and channel usage by segment Population distribution within country Population distribution within customer base
Focus groups External sources Conjoint analysis
Networkbuildout
External sources Data mining Focus groups

Focusofthis presentation
Marketing Actions using different Segmentation Schemes
TYPE Needs/Attitudinal
Analysistoascertaincustomersneeds,wantsor attitudespertainingtothecompanysservices andproducts
APPLICATIONS
Brandimageandproductpositioning Tailoringcustomercommunicationsmessages Newproductdesignandpromotions Supportsservicedeliverystrategy Targetingprospects/acquisition Newofferdevelopment BranchesNetworkDesign Targetingforexistingproductmanagement Targetingchurnprevention Lifestagemarketing DeferentialCustomerRelationshipMarketing KPIstrackingandcompetitionanalysis Monitorandmeasurethenumberandvalue growthwithineachsegment(businessplanning) Executeservicedeliverystrategy Investmentresourceallocation&prioritization Customermanagementstrategy EfficientCampaignTargetingforbetterROI SupportofNextBestActivity
Demographics
Describesthesegmentbasedondemographical informationmanytimesretrievedfromexternal lists
Behavioral
Grouping peoplebyhowtheyactmulti dimensionaltechniques,e.g.,detailusage, buy,revenue
Value
Usingacustomerprofitabilitymeasure,e.g., billedrevenue,ARPU,MARPU,LTV
Propensity
Grouping peopleusingalsoderived propensityvalues,e.g.,presentvalueVS potentialvalue,valueVSrisk
Predictive Scores Could Mean
Likelihood to respond to an offer Which product to offer next Estimate of customer lifetime Likelihood of voluntary churn Likelihood of forced churn Which segment a customer belongs to Similarity to some customer profile Which channel is the best way to reach the customer
Three Methods to Drive Retention & Development
Campaigns
A customer centric company needs to build expertise in three distinct capabilities to drive retention and development initiatives
Type of Campaigns
USE OF CAMPAIGNS
Company-scheduled campaigns The company decides to run a campaign towards a target group at a time that fits the companys outbound campaign execution schedule
Outbound
Company initiates a contact either based on a company schedule or on an event e.g., customer moving house
Event-triggered campaigns An event in a customers life triggers a campaign to be run towards that specific customer
Inbound
A customer initiated contact is used to make a campaign offer once the reason for the contact has been dealt with
Customers
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Data Mining in the Analytical CRM Framework
What is Data Mining
Data
Information
This what Data Mining is all about
Data Mining Methodology CRISP DM
Data Mining Applications in CRM

Segmentation
Value Based Segmentation Present Value VS Potential Value Present Value VS Risk Behavioral Segmentation Multi Attribute Segmentation
Prediction Classification
RFM Churn Prediction Cross/Up Selling Modeling Credit Risk Propensity Models Acquisition Modeling
Campaigning
Campaign Testing using Control groups Next Best Activity
Predictive Technologies in Data Mining

Logistic Regression Models
Predict likelihood of purchase Statistical knowledge needed very effective for linear correlations Predict likelihood of purchase More complex (black box) but sometimes more accurate Predict likelihood of purchase No theory assumptions needed very descriptive regarding results Find segments mostly based on product mix and transactions One of the most important tools for unsupervised segmentation Groups of products typically held together Very popular as Market Basket Analysis the simplest way to X selling Actions and events which indicate the next purchase Very popular for Web Mining taking into account the time order
Neural Networks
Rule/tree induction Models
Clustering Models
Association Detection
Sequence Detection
Behavioural Segmentation (mobile telephony)
Association Analysis (fixed telephony)
Data Mining Effectiveness
Data mining significantly improves targeting and ROI of direct campaigns Data mining models can catch 5 to 6 times more churners than randomness Models accuracy is always dependent on data
The Cumulative Gains Chart
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% ResponseModel NoModel 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
x-axis gives the population percentile y-axis gives % of captured responses customers with top 10% of the scores account for 30% of responders
Classification Trees
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Putting them All Together Deployment
Next Best Activity Components
The main NBA components Credit ability and behavior (Credit Scoring) Current and expected customer Value (Customer Profitability and Value based segmentation) Customer segments based on behavioral, demographical, surve y and financial attributes (Customer Segmentation) Probability of customers accepting cross/up/deep selling activities (Supervised propensity Modeling) Probability of customers voluntary churn in the future (Churn Prediction)
Next Best Activity in Action
Retentionofhighvalue customersisalwaysa firstprioritytask
Customerdevelopment shouldbeappliedtolow riskcustomers
Operational CRM Campaign Management Analytical CRM
DWH & Data Marts
Surveys & Feedback
Understanding of Customer Lifecycle and Migration Streams
Segment-Management integrated Multi-Channel Management
Product/Channel Affinity & Churn Risk Scores
Inbound Offering Branches - MicroMRK
Inbound Offerings Services to Sale Direct Marketing Outbound E-Mail Direct Marketing Outbound Mail
The CRM House
Direct Marketing Outbound Call
Contact Strategy
to 1
Instruments 1
Analytical Foundation
Tactical Segmentation and Clustering
Advance Analytical Techniques
Profile based Offering Internet
Customer value and Customer profitability
Segment based Advertising
Sources used for this presentation
The main source of this presentation is the book: Data Mining Techniques in CRM: Inside Segmentation
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Look Inside your Customers