predictive marketing for banking · optimize offers based upon profitability and response...
TRANSCRIPT
© 2010 IBM Corporation Business Analytics software
Predictive Marketing for Banking
Tony Firmani – Predictive Analytics Solution Architect
© 2010 IBM Corporation
Business Analytics software
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§ Data Drives Decisions
§ Applying Predictive Analytics Throughout Entire Customer Lifecycle
§ Q&A
Session Overview
© 2010 IBM Corporation
Business Analytics software
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DATA DRIVES DECISIONS
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Business Analytics software
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82% of CEOs want to
better understand customer needs
88% 85% of CEOs require more
visibility into their businesses
For CEOs – It’s About Greater Customer Intimacy
Businesses are focused on understanding their customers to drive more/greater business value with their marketing spend
of CEOs will focus on getting closer to their customers in next 5
years
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Business Analytics software
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Clients do not trust banks to offer products and services that are in clients’ best interests
0% 10% 20% 30% 40% 50% 60% 70%
n = 711
Provider Opinion: Providers offer products in the firm’s best interest (Percentage of Survey Respondents1)
Americas
EMEA
AP
Note: 1Question asked: To what extent do you agree / disagree with the following statements about trust, Please rank on a scale of 1-6 where 1=strongly disagree and 6=strongly agree, Investment firms are likely to offer products & services in the investment firm’s own best interest IBM / CFA Survey 2008; IBM Institute for Business Value analysis
Client Opinion: Providers offer products in the firm’s best interest (Percentage of Survey Respondents1)
Trust Gap
Strongly agree
n = 762
0% 10% 20% 30% 40% 50% 60% 70%
Neutral
Strongly disagree
© 2010 IBM Corporation
Business Analytics software
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Lack of information and current pace of business forces organizations to be overly dependent on intuition
6
7%
46%
39%
8%
Source: EIU launch survey for IBM BAO, 2009 Question 1: How often have you made major decisions with incomplete information or information you don’t trust? Question 2: To what extent do you make business decisions based on the following factors?
How do you make business decisions?
Do you have sufficient information to do your job?
“Guestimation” has worked up to a point (arguably we’ve passed it)
Nearly half said “no”
Analytically derived
Personal experience and intuition
Collective Experience
Less extent
Large extent
25%19%
9%
54%
43%
43%
28%
35%
5% 9% 14%15%
Intuition dominates
© 2010 IBM Corporation
Business Analytics software
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Customer Intimacy Means Evolving Improving process and analytics goes hand in hand
Business Operations Maturity
Information and Analytics Maturity
How the business applies information to achieve its goals
• Policies • Business
Processes • Organization
How the business manages information and learns from it
Spreadsheets
Data warehouses, governance and production reporting
Process automation and workflow
Master data management, dashboards and scorecards
Task integration
Business process integration and collaboration
Predictions, contextual business rules and patterns
Source: Breaking Away with Business Analytics and Optimization:, Q4 09 www.ibm.com/gbs/intelligent-enterprise.
Breakaway Real-time analytical
Impact
Adhoc
Foundational
Competitive
Differentiating
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Data at the heart of Predictive Analytics
Behavioral data - Trades - Transactions - Payment history - Usage history
Descriptive data - Attributes - Characteristics - Self-declared info - (Geo)demographics
Attitudinal data - Opinions - Preferences - Needs & Desires - Social Media
Interaction data - E-Mail / chat transcripts - Call center notes - Web Click-streams - In person dialogues
“Traditional”
High-value, dynamic - source of competitive differentiation
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“SMA is the use of insight, derived through social listening and predictive analytic
techniques, and embedded within business processes, that enable an organization to more
effectively interact with consumers by leveraging the collective intelligence of the
global consumer community.”
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What is Social Media Analytics?
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Enhance their Reputation
Understand their customer needs to target new offers and products more cost-effectively through different social media channels and then use SMA insight to predict impact of these introductions
Creating Relationships. Building Advocacy. Improving Loyalty
Evaluate their corporate reputation and make evidence-based messaging decisions that target the right stakeholders at the right time and then use SMA insight to predict the impact on reputation
Improve their Customer Care
Respond more quickly with accurate, timely and relevant insight into customer requests to ensure a consistent brand experience across all channels and then use SMA insight to predict impacts on customer satisfaction
Grow their Business
What does SMA allow customer to achieve?
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Predictive Analytics –
• Predict impact on sentiment of messaging decisions with analysis into consumer and stakeholder sentiment; Predict impact of changes in perception of your corporate reputation, potential reactions to campaigns and business KPI’s such as revenue, customer service levels, customer satisfaction
• Use predictive analytics to identify and target new social media channels to drive greater advocacy of your products and services with key influencers based on predictive analysis of sentiment
• Predict the effectiveness of your campaigns’ messages and their impact on consumers’ purchasing decisions, as well as the resonance and believability of their promise.
Predict impact of positive/negative sentiment on current business KPI’s and future social media activities
Capture Predict Act
Predictive Models
Impact of sentiment on KPI’s
Association Clustering Classification Forecasting
Marketing Data
Sales Data
Third-party Data
Customer Service Data
Financial Data
Business Rules
Make expert knowledge explicit
SMA DataOptimization
Define decision optimization
Produce Scores & Recommendations
Integrate with Social Media
Execute
Perform Social Media Campaign
Scoring
Deploy Decision Models
Prevent
Pro-active manage reputation
Feedback SMA
Perform Root-Cause Analysis
Upda
te E
xper
t
Know
ledg
e
Process Automation & OptimizationAutomate prediction & deployment process
Process Management & Control
Monitor & manage analytics process
Deploy
Integrate
Capture Predict ActCapture Predict Act
Predictive Models
Impact of sentiment on KPI’s
Association Clustering Classification Forecasting
Marketing DataMarketing Data
Sales DataSales Data
Third-party DataThird-party Data
Customer Service Data
Customer Service Data
Financial DataFinancial Data
Business Rules
Make expert knowledge explicit
SMA DataSMA DataOptimization
Define decision optimization
Produce Scores & Recommendations
Integrate with Social Media
Execute
Perform Social Media Campaign
Scoring
Deploy Decision Models
Prevent
Pro-active manage reputation
Feedback SMA
Perform Root-Cause AnalysisPerform Root-Cause Analysis
Upda
te E
xper
t
Know
ledg
e
Process Automation & OptimizationAutomate prediction & deployment process
Process Management & Control
Monitor & manage analytics process
Deploy
Integrate
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Business Analytics software
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APPLYING PREDICTIVE ANALYTICS DELIVERS THROUGHOUT ENTIRE CUSTOMER LIFECYCLE
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Business Analytics software
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How to develop customers insights?
What KPIs/ reports are needed to
effectively track business
performance?
• How to understand customer usage and spend patterns?
• Based on what parameters should customers be segmented?
• What data is required?
• How to integrate data in ‘One-view’ mode?
• How to track risk performance?
• How to track campaigns performance?
• What KPIs / reports are required?
How to grow the portfolio profitably?
How Banks Can Use Customer Data and Analytics
• Who are the high-value customers?
• How to retain these customers?
• What is the right product to cross-sell/up-sell and to whom?
Gain Customer Insights
Manage Churn, Cross-Sell
Track Performance
How to leverage insights to acquire right
customers?
• How to identify & acquire ‘good’ customers?
• How to boost my acquisition efforts?
Improve Acquisition
How to monitor and control Credit Risk?
• How to improve underwriting?
• How to minimize credit loss while achieving growth?
• How to improve collection efficiency?
Manage Risk
How to identify and define the right offer
and positioning?
• How to establish potential market opportunity?
• What value proposition will help capture the potential?
• How to take the offers to market effectively?
Differentiate Positioning &
Offers
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Business Analytics software
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Smarter Planet Means Moving Away from the Broad Brush Impacting Customers Uniquely Throughout the Lifecycle
One to One
Purchase More Advocate
Product
Research & Purchase Product
Use Product
Get Customer Service
The Broad Brush
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Business Analytics software
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Customer Intimacy Means Different Focus at Each Stage Marketing
Support/Services Feedback Management
Social Intelligence
Feedback
Dialog
Sales Selection & Acquisition
Extension
Support
Retention
Purchase More Advocate
Product
Research & Purchase Product
Use Product
Get Customer Service
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Business Analytics software
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This Approach Supports Customer Lifecycle Management Needs
Risk Analytics
Risk Strategy
Application/Behavior Scorecard and Strategy
Collections Scorecard and management
Recovery Scorecard and management
Manage risk across customer life-cycle
Acquisition
Improve approval rate with application scorecard &
acquisition through analytics led campaigns
Segmentation
Enhance the understanding of customer base and
market through inward-outward (multivariate)
segmentation
Portfolio Management
Deepen relationship with customers through up-sell /
cross-sell of relevant products
Loyalty Management
Loyalty programs and right campaigns to increase stickiness to the bank
Retention /Attrition
Retention campaigns to stem voluntary attrition
Customer Life Cycle Management
Performance Management Executive Dashboard to track all essential Business KPIs
Gain Customer Insights
Prevent Churn, Cross-Sell
Track Performance
Improve Acquisition
Manage Risk
Differentiate Positioning &
Offers
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Business Analytics software
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Inability to predict
Variety
Velocity Volume
Lack of insight
Variety
Smarter Banks Outperform with Analytics Changes in industry require new disciplines and tools
Predict and act
Real-time, fact-driven
Optimized
Everyone
Point of impact
Sense and respond
Instinct and intuition
Automated
Skilled analytics experts
Back office
Velocity
Lack of insight
Variety
Volume
Inability to predict
Inefficient access
Inefficient access Velocity
Velocity
Volume
© 2010 IBM Corporation
Business Analytics software
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The Predictive Advantage
Traditional BI and Conventional Analysis: • Branch Performance • Profit and Loss Analysis • Ad Hoc Analysis • Product Performance
Insight Driven Predictive Analytics: • Customer Segmentation • Customer Profitability • Market Basket Analysis • New Branch / Market Analysis • Customer and Investment Risk
Transformational Deployment of Predictive Models: • Real-time Decision Management • Optimized Outcomes Based Upon Objectives • Deliver Cross-Sell Recommendations • Dynamic Pricing Based Upon Risk and Profitability Models
Sense & Respond
Predict & Act
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Business Analytics software
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Business Scenario: Customer Profitability
Customer Profitability With millions of
customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an
individual level?
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Business Analytics software
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Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …
Customer Profitability With millions of
customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an
individual level?
Business Scenario: Customer Profitability
© 2010 IBM Corporation
Business Analytics software
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Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …
Customer Profitability With millions of
customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an
individual level?
Customer Profitability Segmentation Segment customers based upon profitability measurements
High Profitability
Med Profitability
Low Profitability
Business Scenario: Customer Profitability
© 2010 IBM Corporation
Business Analytics software
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Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …
Customer Profitability With millions of
customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an
individual level?
Monitor & Measure Customer Profitability
Customer Profitability Segmentation Segment customers based upon profitability measurements
High Profitability
Med Profitability
Low Profitability
Business Scenario: Customer Profitability
© 2010 IBM Corporation
Business Analytics software
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Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …
Customer Profitability With millions of
customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an
individual level?
Customer Profitability Segmentation Segment customers based upon profitability measurements
Monitor & Measure Customer Profitability
Predictive Models Predict which products or services customers are most likely to accept
Business Scenario: Customer Profitability
© 2010 IBM Corporation
Business Analytics software
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Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …
Customer Profitability With millions of
customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an
individual level?
Monitor & Measure Customer Profitability
Decision Management Optimize offers based upon profitability and response predictions
Predictive Models Predict which products or services customers are most likely to accept
Customer Profitability Segmentation Segment customers based upon profitability measurements
Business Scenario: Customer Profitability
© 2010 IBM Corporation
Business Analytics software
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Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …
Customer Profitability With millions of
customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an
individual level?
Monitor & Measure Customer Profitability
Decision Management Optimize offers based upon profitability, risk and response predictions
Customer Interaction Deliver prioritized
recommendations that drive increased
profitability and are optimal for the customer
Predictive Models Predict which products or services customers are most likely to accept
Incr
ease
Cus
tom
er P
rofit
abili
ty
Customer Profitability Segmentation Segment customers based upon profitability measurements
Business Scenario: Customer Profitability
© 2010 IBM Corporation
Business Analytics software
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Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …
Customer Profitability With millions of
customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an
individual level?
Monitor & Measure Customer Profitability
Decision Management Optimize offers based upon profitability, risk and response predictions
Customer Interaction Deliver prioritized
recommendations that drive increased
profitability and are optimal for the customer
Predictive Models Predict which products or services customers are most likely to accept
Incr
ease
Cus
tom
er P
rofit
abili
ty
Customer Profitability Segmentation Segment customers based upon profitability measurements
Business Scenario: Customer Profitability
© 2010 IBM Corporation
Business Analytics software
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You need to the answer now – or you lose…
Cross-sell? <context data>
<customer data>
Potential Campaign
Valid in this case?
Predicted Profitability
Response Probability
Expected Value
A No
B Yes 90 54% 49
C Yes 85 62% 64 C C
Leveraging Each Customer Contact as a Sales Opportunity
Customer
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Business Analytics software
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Customer Intimacy Moves Beyond Sales and Marketing
• Customer Churn • Marketing Spend • Sales Productivity
Enhance Customer Understanding
• Customer Service • Channel Management • Research and Sales
Foster Collaborative Decisions
• Trading Advantage • Client Interactions • Customer Experience
Optimize Real-Time Decisions
• Risk Management • Social Business • Strategy Alignment
Enable Enterprise Visibility
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Business Analytics software
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Key steps for achieving success
Source: Analytics: The New Path to Value, a joint MIT Sloan Management Review and IBM Institute of Business Value study. Copyright © Massachusetts Institute of Technology 2010."
Pick your spot
Continuous Value Delivery
Prove the value
Biggest and highest value opportunity
Start with questions Embed insights
Add capabilities Information agenda
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Business Analytics software
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Questions?
Thank You
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