Social Networks in Data Mining: Challenges and Applications

SAS Talks
May 10, 2012

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Copyright 2012, SAS Institute Inc. All rights reserved.

Social Networks in Data Mining:

Challenges and Applications
SAS Talks
May 10, 2012

Copyright 2012, SAS Institute Inc. All rights reserved.

Speakers
Stacy Hobson
Director, Customer Loyalty and Retention
SAS Institute

Bart Baesens
Associate Professor, K.U. Leuven (Belgium)

Lecturer, University of Southampton (United

Kingdom)

Copyright 2012, SAS Institute Inc. All rights reserved.

Social Networks in Data Mining:

Challenges and Applications
Prof. dr. Bart Baesens1
Dr. Wouter Verbeke2
1,2Department of Decision Sciences and Information Management

K.U.Leuven (Belgium)

1Vlerick Leuven Ghent Management School (Belgium)

1School of Management

University of Southampton (United Kingdom)

{Bart.Baesens;Wouter.Verbeke}@econ.kuleuven.be
Twitter: DataMiningApps
Facebook: Data Mining with Bart

My Research Team
process mining
business process management
data mining

Jochen.DeWeerdt@econ.kuleuven.be
data quality in a credit risk
management context
data quality and decision
making
data quality metrics
Helen.Moges@econ.kuleuven.be

customer churn prediction

social network analysis
profit based data mining

Thomas.Verbraken@econ.kuleuven.be

(social) network analysis

incorporating domain knowledge
in classification models
customer churn prediction
Wouter.Verbeke@econ.kuleuven.be
credit risk modeling and scoring
rating transitions
microfinance
survival analysis
Philippe.Louis@econ.kuleuven.be
machine learning in software
engineering: software fault &
effort prediction
comprehens. decision supportive data modeling systems
Karel.Dejaeger@econ.kuleuven.be

Overview

Revisiting Traditional analytics

Improving Traditional analytics
Social networks and applications
A three-layered social network learner
Case study: social networks in Telco

Markov assumption
Local versus Network variables
Featurization
Empirical Findings

Conclusions
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Revisting Traditional Analytics

Traditional Analytics: Performance benchmarks

Improving Traditional Analytics: 2 strategies

Strategy 1: Use complex modeling techniques
E.g. neural networks, support vector machines, random forests,
Pro: powerful models (e.g. universal approximation)
Con: loss of interpretability, marginal performance gains

Strategy 2: Enrich your data

External data (FICO score, bureau data, )

Social Network data!
Pro: model still interpretable
Con: additional resources needed (economic, computational)

Traditional Approach to Analytics

Social Networks: Nodes versus Edges

Nodes
Customer (private/professional), household/family,
patient, doctor, paper, author, terrorist, Web page,

Edges
Different kinds of relationships, e.g., colleagues, friends,
patients, disease, contact, reference,
Weighted based on, e.g., interaction frequency,
importance of information exchange, intimacy,
emotional intensity,
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Example Social Network Applications

Churn detection in a Telco setting
Nodes are customers
Edges are calling patterns between customers (based on CDR data)

System risk in a Credit Risk setting

Nodes are banks
Edges are liquidity dependencies

Anti-Money Laundering
Nodes are bank accounts
Edges are money transfers

Viral marketing
Nodes are customers
Edges are messages
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Social Network Analytics: Challenges

Finding the right balance between local, customer
specific versus network information
Its not all in the network!

Need procedures to infer the behavior of all nodes

simultaneously
Collective inference procedures (e.g. Gibbs sampling)

No easy separation in training and test set

Cannot just cut the network in two!
Out-of-time validation needed
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Out-of-Sample versus Out-of-Time Validation

?

?
?

?
?

?
?

Time

14

A three layered Social Network Learner

Local model
Only uses local (e.g., customer specific) information
E.g. socio-demographic, RFM, customer interaction,
Can be estimated using e.g. logistic regression, decision
trees,

Network model
Takes into account the network information

Collective inference
Determines how the nodes mutually influence each other
15

?
?

?
?

?
?

?
?
?
?

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Case Study: Social Networks in Telco

Traditional customer churn prediction models treat
customers as isolated entities
Customers are however believed to be strongly
influenced by their social environment
Recommendations from peers, mouth-to-mouth
publicity
Social leader influence
Promotions to acquire groups of friends
Reduced tariffs for intra-operator traffic
17

Local Models for Churn Prediction

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Constructing a social network using CDR Data

Call Detail Records (CDR) data

Detailed logs about each interaction involving a customer

Gigabytes to Terabytes of data each day
Extract the call graph using computationally efficient algorithms
Represent call graph as sparse matrix
Edge definition (SMS/Voice/MMS/Email/)

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21JAN2010:23:46:02 0 0 0 0 2 1 1
187097451101277 32465245451 206101100499483 356712034636630 I 32473161616 8 Proximus SMSC Platform 99
21JAN2010:23:45:44 0 0 0 0 2 1 1

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From CDR data to Sparse Matrix

Need facilities for sparse matrix handling and parallel computing

181806208300809 32462208699 206105300897975 357014032645640 I 32461002530 9 MOBISTAR MOBILE 99 21JAN2010:23:45:44 0 0 0 0 2 1 1
195455641 32475611232 206102200262341 351913035725230 I 32476000005 10 Base SMSC Platform 99 21JAN2010:23:46:02 0 0 0 0 2 1 1
187097451101277 32465245451 206101100499483 356712034636630 I 32473161616 8 Proximus SMSC Platform 99 21JAN2010:23:45:44 0 0 0 0 2 1 1

G
2

Weighted
network

E
9

Raw
CDRs

Case Study: European Telco operator

Prepaid segment; about 2.000.000 customers
5 months call detail records + local attributes
Churn rate 0.5% per month (skewed class
distribution!)
Weighted edges: number of seconds called during
3 months
About 8.000.000 edges
Total data set about 300 Gigabytes in size

The Markov assumption

The class/behavior of a node in the network only depends
upon the class/behavior of its direct neighbors
Aka homophily, guilt by association
Birds of a feather, flock together
attributed to Robert Burton (1577-1640)

(People) love those who are like themselves

Aristotle, Rhetoric and Nichomachean Ethics

Needed to facilitate computations (cf. Markov chains)

22

Local versus Network Variables

A network variable aggregates information that is
contained within a network structure and makes a
differentiation in the destination of outgoing links
or the origin of incoming links
Examples:
the number of contacts (local variable)
the number of contacts with churners (network
variable)
the number of international calls (network variable)
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Local versus Network variables

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A Basic Network Model: Featurization

Featurization or propositionalization: translate
network into traditional attributes
Network attributes can be included in traditional
model (e.g. logistic regression)
Create as many as possible and do stepwise
regression
A simple, interpretable social network classifier!

25

Example Network Model: Featurization

Example Network Model: WVRN

Results: Finding 1
Network models boost performance and profit
compared to a local model

Incremental profit increase

compared to no network effects

28

Results: Finding 2
Non-Markovian network effects incorporating the
impact of higher order neighbors leads to improved
predictive power and profit!
Incremental profit increase
compared to first order network
effects

Note: higher order effects previously

discovered in the spreading of happiness
and obesitas (N. Christakis, Social
networks and happiness)

29

Results: Finding 3
Network models detect other types of churners
compared to traditional models!
Fraction of the churners detected by the
network models (as a function of the
selected fraction of customers, ranked
according to their predicted probability to
churn), that are NOT detected by the
local model
Different curves represent different network
models (induced by different techniques)

Synergy opportunities!

30

Ensemble approach : Combining Local and Network

models
Use two models in parallel by selecting customers
indicated by the local model and the network model
Decide upon optimal fraction (current research)
Local model

Network
model

0.13

0.24

0.54
0.34

0.68
0.18
0.92
0.22

0.84
0.29

Ensemble model output

31

Ensemble approach: 2D Lift Curve

32

Current Research Topics

Extensions towards regression context (e.g. CLV)
Applications in other contexts (e.g. credit risk,
anti-money laundering, customer acquisition, )
Integrating local information in a network learner
Quasi-Social Networks
Community mining
Backtesting
33

Key lessons learnt

Introduced a three-layer social network learning
environment (local information, network information,
collective inferencing)
Defined local versus network variables
Introduced featurization as a basic social network
learner
Discussed how non-Markovian behavior can be
modelled in a straightforward way
Illustrated the theoretical concepts using a real-life
case study about churn prediction in the Telco sector

34

References

VERBEKE W., DEJAEGER K, MARTENS D., HUR J., BAESENS B., New insights into churn prediction in the
telecommunication sector: a profit driven data mining approach, European Journal of Operational
Research, forthcoming, 2011.
DEJAEGER K., VERBEKE W., MARTENS D., BAESENS B., Data Mining Techniques for Software Effort
Estimation: a Comparative Study, IEEE Transactions on Software Engineering, forthcoming 2011.
MARTENS D., FAWCETT T., BAESENS B., Editorial Survey: Swarm Intelligence for Data Mining, Machine
Learning, Volume 82, Number 1, pp. 1-42, 2010.
VERBEKE W., MARTENS D., MUES C., BAESENS B., Building customer churn prediction models with
advanced rule induction techniques, Expert Systems with Applications, Volume 38, pp. 2354-2364,
2011.
BAESENS B., MUES C., MARTENS D., VANTHIENEN J., 50 years of Data Mining and OR: upcoming trends
and challenges, Journal of the Operational Research Society, Volume 60, pp. 16-23, 2009.
GLADY N., CROUX C., BAESENS B., Modeling Churn Using Customer Lifetime Value, European Journal of
Operational Research, Volume 197, Number 1, pp. 402-411, 2009.
MARTENS D., BAESENS B., VAN GESTEL T., Decompositional Rule Extraction from Support Vector
Machines by Active Learning, IEEE Transactions on Knowledge and Data Engineering, Volume 21,
Number 1, pp. 178-191, 2009.
GLADY N., CROUX C., BAESENS B., A Modified Pareto/NBD Approach for Predicting Customer Lifetime
Value, Expert Systems With Applications, Volume 36, Number 2, pp. 2062-2071, 2009.
BAESENS B., SETIONO R., MUES C., VANTHIENEN J., Using Neural Network Rule Extraction and Decision
Tables for Credit-Risk Evaluation, Management Science, Volume 49, Number 3, pp. 312-329, March
2003.
35

FYI

Advanced Analytics for Customer Intelligence Using SAS

Lecturer: prof. dr. Bart Baesens
3-day course offered
Many companies have gathered huge amounts of customer data about
marketing success, use of financial services, online usage, and even fraud
behavior. Given recent trends and needs such as mass customization,
personalization, Web 2.0, one-to-one marketing, risk management, and fraud
detection, it becomes increasingly important to extract, understand, and
exploit analytical patterns of customer behavior and strategic intelligence. This
course helps clarify how to successfully adopt recently proposed state-of-the
art analytical and data-mining techniques for advanced customer intelligence
applications. This highly interactive course provides a sound mix of both
theoretical and technical insights as well as practical implementation details
and is illustrated by several real-life cases. Background material such as
selected papers, tutorials, and guidelines are provided.
36

Acknowledgments
Jerry Oglesby, Director Global Academic Program & Global
Certification Education Division
Larry Stewart, SAS Education Vice President
Sean OBrien, Director, Business and Curriculum Development
Bob Lucas, Statistical Training and Technical Services Director
Karen Washburn, Business Knowledge Series Manager
Patsy Poole, Project Manager
Hillary Kokes, former Business Knowledge Series Manager
Lieve Goedhuys, former Academic Program Manager,
SAS Institute Belgium-Luxembourg
All the other great SAS folks for the excellent collaboration
during the past years!
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Q&A

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Copyright 2012, SAS Institute Inc. All rights reserved.

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