smarter analytics leadership summit - ibm · => customer is eligible for a hardware upgrade with...

Smarter Analytics Leadership Summit Customer Analytics Track

Optimize Every Customer Interaction with Next Best Action

Agenda

Farhana Alarakhiya

Cris Payne, XO Communications

David Pugh

Jon Hounslow, David Pugh, Steve Buckley, and Cris Payne

Farhana Alarakhiya

Introductions and Scenario

Customer Analytics Journey

Next Best Action Overview

Next Best Action Workshop: The “How to” of Next Best Action

Wrap-up / Q&A

© 2013 IBM Corporation 2


Welcome and Scenario Mobile Phone

Farhana Alarakhiya

New Imperatives of Marketing

Obama’s team used

analytics to gain

DEEP KNOWLEDGE

of individuals

And TURNED that

knowledge

into a SYSTEM of

ENGAGEMENT


Bill has had a

number of

dropped calls

recently

Bill called a

competitor’s

contact center

Action Impact on

Churn

Impact on

Customer

Lifetime Value

Likelihood

to respond

positively

to action


$20 off this month’s bill

Deliver an apology —

Issue with cell tower

being fixed this

weekend

6 months free

unlimited data plan

Upgrade phone


Customer Analytics journey

Cris Payne XO Communications

Cris Payne, XO Communications

Cris Payne is the Senior Manager of Customer

Intelligence & Predictive Analytics at XO

Communications, Inc. He is responsible for the

direction and implementation of predictive analytic

sciences and targeted marketing programs at XO.

Mr. Payne has over 14 years experience in the

telecommunications industry building technology

solutions. While at XO, Cris has launched several

innovative programs and technologies including

SPSS Modeler.

Cris holds a BA in business administration from the

University of Utah and an MBA from Weber State

University John B. Goddard School of Business and

Economics. He lives in the Salt Lake City area with

his wife, Danielle, and daughters, Chloe, Aysha,

and Berkley.


XO Communications

Organization: B2B telecommunications service provider, headquartered in

Herndon, VA (4k employees)

Assets: Nationwide 100Gbps IP network, extensive local metropolitan networks

and broadband wireless facilities

Customers: Retail services (VOIP, Data, Networks) provided to businesses.

Wholesale services (long haul circuits) provided to other telecommunications

carriers.

Monthly “subscription” business model


Investment Drivers

Why we invested in business analytics

Improved Targeting

Cost Control: Focus resources on high-value, high-potential customers to control

and/or reduce overall marketing costs.

Enhanced Revenue: Better targeting yields campaign uplift, translating directly

into enhanced revenue.

To Achieve a Competitive Advantage: A well-executed Predictive Analytics

strategy provides a key advantage over competitors in the marketplace.

Customer Experience


Churn Success at


0.00%

1.50%

3.00%

Ch

urn

Ra

te

Churn Rate X Size

Large Customers

Med-Small Customers

ROI Results (Churn Project)


How successful was our investment?

Overall Churn Rate nearly halved since project began.

1st Year:

ROI: 376%

Payback: 5 months

Annual Churn Savings: ~$11,200,000


Next Best Action Overview

David Pugh

The New Customer Experience Mandate

Sales & Marketing Programs

Communicate with consistent messages

across channels based on my needs

Expectation

Delight me with proactive steps to improve my situation

based on your guidance

Expectation

Deliver a relevant and personalized experience

that’s consistent across all channels

Expectation

The Customer

Experience

Insights &

Analytics


IBM Smarter Analytics Signature Solution: Next Best Action

Business outcomes

Improve service delivery

and customer

satisfaction

Optimize revenue

generating actions such

as up-sell, cross-sell,

retention, and marketing

mix

Increase strategic

lifetime value and loyalty

Solution overview

Deliver the most appropriate action at the right

time across channels. Personalized interactions

are enabled by:.

Comprehensive view of a customer

Real-time analytics to anticipate customer

behavior

Cross-channel delivery of best action to

address customer need and enhance long term

business revenue

Build long-term customer relationships that drive enterprise business results

— one interaction, one decision at a time.


Banking/FM Telco Insurance

NBA drives successful, relevant interactions across all channels and

all lines of business in batch and real time based on the latest 360

customer data


Current Customer Request Next Best Action

Next Best Action: In summary, what makes NBA unique?

Advanced Analytics: Market-leading tools for predictive and advanced analytics Integrated optimization techniques that combine analytic output

for the best answer

Decision Management: Mature technology combining analytics and business rules

creation, integration, and execution Real-time recommendations beyond just marketing offers

Cross Channel Real Time Action: Actions include customer service, issue resolution, account

management response and billing—all touch points managed in real time through the appropriate channel.

Multiple Entry Points: Analytics, Decision, and Information Management provide

quantitative starting points for Next Best Action project.

IBM Big Data Platform: Integrate and manage the full variety, velocity, and volume of data. Establish a phased approach for enhanced 360 customer view. Apply advanced analytics to information in its native form.


NBA Subsystems


Capturing

Customer’s

Activity

Analytics

Management

Real-time

Decisions

Feedback

Decision

Models

Customer Channels

Master

Information &

System of

Record

Human

Operated

Channel

Reporting

Usage

Automated

Channel

Decision Models

Additional

Information

Trigger

Trigger Execute

Action

Outcomes

Action

Context

1

2

3

Capturing Customer Activity:

The three major parts, or subsystems of the NBA solution are:

Analytics Management: Responsible for developing the decision models for the solution.

Real-time Decisions: This subsystem contains the execution of the Next Best Action decision loop.

This subsystem gathers information about the customer’s activity, including the outcomes of the Next Best Actions offered by this solution.


Getting Started with Next Best Action

Cris Payne David Pugh Jon Hounslow Steve Buckley

NBA Discussion Topics


The “How to” of NBA

How to Start on an NBA Journey

Use of Use Cases / Business scenarios

Catalyst for Change

Role of Analytics

How much Data do you need

Building a Vision and a Roadmap

IBM Smarter Analytics is a holistic approach

that turns information into insight and insight into

business outcomes.

with confidence at the point of

impact to optimize outcomes

see, predict and shape

business outcomes

your organization

around information

from solutions that get smarter with every outcome

Learn

Align Anticipate Act

through analytics for breakaway results

Transform


Business value is realized as soon as we link data to analysis

to the point of customer contact


Chat Voice

Op

era

tion

s

Ch

an

ne

l

Email

Social Media

IVR

Web

Mobile Apps

SMS

Da

ta S

ou

rce

s

Info

rma

tion

An

aly

tics

Information Analytics Operations

Align Anticipate Act


The NBA Journey

Entry Points

Use Cases / Business Scenarios

Catalyst for Change

Role of Analytics

Data Considerations



NBA Subsystems


Capturing

Customer’s

Activity

Analytics

Management

Real-time

Decisions

Feedback

Decision

Models

Customer Channels

Master

Information &

System of

Record

Human

Operated

Channel

Reporting

Usage

Automated

Channel

Decision Models

Additional

Information

Trigger

Trigger Execute

Action

Outcomes

Action

Context

Four Example

Entry Points

Initiative from within a single

Channel Individual analytics effort performed

within a channel e.g. contact center to

drive more successful interactions

Build Analytics Capability Analytics is a focus area, maybe

as a shared service and maybe

driven by CXO level as a

business imperative

Marketing Led Marketing driven initiative focused

on improving offer acceptance,

may extend to both inbound and

outbound channels

Create single,

trusted Data

Source A CXO strategic

initiative or led by IT

as the source of a

trusted 360 view of

the customer; likely

done in parallel with

other NBA activities

Next Best Action: Renewals use case


High ARPU

Long tenure

6 mths left on contract

Service call: email reset

Advice: eligible for HUG

Renews

If ARPU >=$90 AND customer tenure >5 years AND contract term=36 months

AND months remaining on contract <=9 months

=> customer is eligible for a Hardware upgrade


AND months remaining on contract >9 months and <=12 months

=> customer is eligible for a Hardware upgrade with an Early upgrade fee ($15 * months remaining on contract)


AND months remaining on contract >9 months and <=12 months AND Predicted Churn Risk > 0.7

=> offer Hardware upgrade – waive early upgrade fee

High ARPU

Long tenure

10 mths left on contract

Call spend declining

2 service queries in six weeks

Satisfaction = 5

Service call: email reset

Offer: free early upgrade

Renews

Use cases are selected according to business value

and ease of implementation


Ease Of ImplementationHard Easy2,0 3,0 4,00,0

0,0

1,0

2,0

3,0

4,0

Business

Value

Low Value

High Value

1,0

22

2

1

1

1

1

2

3

2

1

Size of the Bubble

represents the

Progress along the

Roadmap

Renewal

Billing

Service Troubleshooting

Hardware Repair

Churn

Multi Channel LOB

1

2

2 22

2

1

1

1

1

2

3

2

1

Size of the Bubble

represents the

Progress along the

Roadmap

Renewal

Billing


Hardware Repair

Churn

Multi Channel LOB

Renewal

Billing


Hardware Repair

Churn

Multi Channel LOB

1

2

2

Catalysts for Change


How do I access information in diverse data sources?

How can everyone use and trust the same view

of data across my organization?

How do I scale to support mission

critical deployments?

How do I deploy today and respond to changing

requirements?

Many user roles and demands

Multiple Tools and Processes

Many applications, platforms

Information silos, multiple sources

Catalysts for Change Unorganized Behaviors

Beyond data and

technology, XO

Communications

needs to organize for

success; Introduce BI

Best Practices and

governance, support

End User enablement

and align our BI

Strategies and

priorities to our

strategic goals


The NBA Journey

Entry Points

Use Cases / Business Scenarios

Catalyst for Change

Role of Analytics

Data Considerations



Areas of Analytics Focus

Churn risk mitigation and management

Predicting/identifying fraud

Pursuing new revenue opportunities

Unstructured data analysis

Operationalizing models, segmentation

Developing the essential and elusive “single version of the truth”

Determine promotion effectiveness and use to build better predictive models


Results of Utilizing Analytics

Reporting What happened? (Rear-view mirror, inactive)

Analytical Why did it happen? (Root cause analysis, reactive)

Predictive What will happen? (Forward forecasting, prediction, proactive)

Operational What is happening? (Dashboarding, real-time, process

monitoring, autonomous)

Adaptive What do I want to happen? (Strategic, process

modification/management, proactive management)


Differentiating Analytics Capabilities ….


Customer

Lifetime Value $

Growing the Customer Relationship

Acquire Personalize Retain Grow

Right Offer

at Right Time

1:1 inbound

communications

with the ability to

determine

likelihood to

respond.

Analytical

Sophistication

30

Building the

Relationship

Moving from

Offer to Action;

consider recent

service history,

transactions and

interactions

Using

behavior

patterns

Predicting behavior

and using triggers

to make

recommendations

that reduce churn

and drive cross sell /

up sell

Focus on

Lifetime Value

Apply more

sophisticated

modeling to move

customers along the

path of highest value.

Current policy

Optimized NBA policy

Customer A’s path under…

Action A

Action B

Action C

Action E

Action D

NBA Optimizer adds state-based action optimization ……..

in pursuit of maximum customer lifetime value

Customer is in some state (micro-segment) at any point in time

Enterprise’s action will move customer into another state

Enterprise’s goal is to take sequence of actions to guide customer's path to maximize

customer’s lifetime value


Bargain

Hunter

Repeater

Loyal

Customer

Valuable

Customer

One Timer

Repeater

Defector Defector

Repeater

Loyal

Customer

Potentially

Valuable

S1

M1

Macro-

Segments:

Fairly static

attribute

definition

S2 S3

M1 M1

S4 S5

M1 M1

Micro-

Segments:

Defined by

current state on

a defined path

O1 O1 O1 O1 O1

Actions &

Offers:

micro-segments

enable better

targeting

Macro-Segments vs. Micro-Segments (States)


M2 M2 M2 M2 M2

O2 O2 O2 O2 O2

M3 M4 M3 M3 M3 M4 M3 M4

O3 O4 O3 O3 O3 O4 O3 O4

M5 M6

O5 O6

M4 M5

O4 O5

M4 M5

O4 O5

M7

O7

Next Best Action enables clients to tap into the wealth of insights

and predictions hidden in their customer data

Behavioral data Orders Transactions

Payment history Usage history

Descriptive data Attributes Characteristics

Self-declared info (Geo)demographics

Attitudinal data Opinions Preferences

Needs & Desires

Interaction data E-Mail / chat transcripts Call center notes

Web Click-streams

Who? What?

Why? How?


Some relevant offers, but

very confusing because

some are not

Offers feel more tailored to

me, but one hand doesn’t feel

like it knows what the other is

doing

Recommendations feel relevant

and I see consistent

messages when I interact with

Insurance Co #1

Insurance Co #1 is amazing – it tells

me what I need to know when I need

to know it. I tell all my friends how

easy Insurance Co #1 makes it to do

business on line, on my ipad, over

the phone – any way I choose

Four stages to the Evolution of the Consumer Experience:

FROM products TO value added experience


A

B

C

D

Evolution of

the Consumer

Experience

Tailored

Consistent Timely

Relevant

Initial Scope and Focus


Immediate benefits to XO Communications in deploying the BICC:

Scalability End User Enablement

BI Enabling Best Practices BI Business Strategy Alignment

One Single Version of the Truth Promotion

The XO BICC will provide economies of scale for BI efficiencies and be a solid foundation to radiate an ever expanding BI footprint

Business Strategy

Alignment

Best Practices & Standards Management

Communication & Evangelism

Community Services

Enterprise Technical

Architecture

Advise & Consult

Support

IT Governance Alignment

Data Governance Alignment

Education

XO BICC

BI Community of Practice & Infrastructure Data Integrity & Efficiencies through BI Best Practices, Data Governance, Guiding Team

BI Strategy Alignment BI Business Transformation through strategic priority project support

BEST PRACTICES & STANDARDS MANAGEMENT

Methodologies, Knowledge base, Standards

Proven practice assets, Sharing Best Practices BUSINESS STRATEGY ALIGNMENT

Strategy & Value Assessments, Roadmap to BI

maturity, Value Validation, BI Priorities DATA GOVERNANCE ALIGNMENT

Stewardship, Ownership Definitions, Quality

EDUCATION

User Adoption Services, Education (Classes, self-

paced, CBT), Skills Assessments, Training Paths /

Roadmaps COMMUNICATION & EVANGELISM

Success Stories, Newsletters, User Groups,

Technology Showcase, Wikis, blogs, social media

ENTERPRISE TECHNICAL ARCHITECTURE

Planning & Design, Installation, Provisioning, Tuning

BI Enablement End User Enablement through Education, Communications & Project Assurance Services

Initial Focal Areas

Primary

Secondary

Roadmap

Text Analytics: Near-real-time text analysis will allow immediate identification of

operational issues.

Visual Analytics: Better visualization of geographic, perceptual, or behavioral

trends. More intelligent dashboards.

Decision management modeling and optimization analytics: Embedding predictive

analytics in operational systems optimizes and accelerates business processes by

suggesting effective actions, correct messages for reps to present to at-risk

customers. Note: Next best action (IBM term)

Propensity to Purchase


Defining an NBA project – and where to start – should consider 4 key inputs


Key representative Use cases and

capabilities

NBA Reference

Architecture

Business layer

Application

Technology

CLIENT Data Roadmap

CLIENT Technology Roadmap

In Flight & planned

(Non-Data) Projects for

example, IVR Evolution

Desktop / Telephony

BI roadmap

360 View of the

customer

MDM initiatives

Assessed and

prioritized

Client

NBA

Roadmap

Client Business Strategy

Farhana Alarakhiya

Conclusion


Next Best Action Redguide

Download the Next Best Action

Redguide as your guide to the

solution

Share with your C-level executives

Understand the solution architecture

Learn from case studies across

different industries


../../../../../Users/Users/IBM_ADMIN/Users/IBM_ADMIN/AppData/Desktop/AppData/Local/Temp/Redguide%20http:/www.redbooks.ibm.com/abstracts/redp4888.html?Open

Demo: Next Best Action for Telecommunications


Information

Analytics

Speaking

with the

customer

Building

predictive

models

Defining the

Next Best

Action

Creating

marketing

offers

Establishes

the Information

Supply Chain

Operations

NBA

Optimizer

Demo


41

Demo: Next Best Action for Banking


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