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January 23, 2008

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Oracle Data Mining for Targeted and Personalized Letter Generation with BI Publisher
Mark F. Hornick Senior Manager, Data Mining Technologies, Oracle

Agenda
• Traditional vs. intelligent form letters • Oracle BI Publisher and Oracle Data Mining • Scenarios and approach
• Overall process • Response modeling • Offer personalization

• Architecture • Summary and Resources

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Oracle BI Publisher + Oracle Data Mining = “Green” Solutions
• U.S. catalog companies sent out 17 billion catalogs last year - 59 for every man, woman and child in the nation • Magazine production in the U.S. uses more than 2.2 million tons of paper per year and the number is increasing annually • If everyone in the US was able to reduce their 10.8 pieces of junk mail received each week, we could save nearly 100 million trees each year

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Agenda
• • • • • Traditional vs. intelligent form letters Oracle BI Publisher and Oracle Data Mining Scenarios and approach Architecture Summary and Resources

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Form Letters traditionally…
• All customers get the same form letter or • Vary form letters based on coarse customer segments

• Response rates are typically low: 0-4%

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Form Letters traditionally…
• All customers get the same form letter, or • Vary form letters based on coarse customer segments
• Manual (query-based) customer selection criteria is used to target customers with one or more offers • Segments based on (out)dated snapshot of customer information

• Response rates are typically low: 0-4%
• Content emailed/sent is irrelevant to over 95% of recipients!

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“Intelligent” Form Letters…
• Dynamically predict which customers are likely to respond based on latest customer information • Dynamically predict which offers are likely to appeal to individual customers

Enabled using BI Publisher with Oracle Data Mining

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“Intelligent” Form Letters…
• Dynamically predict which customers are likely to respond based on latest customer information
• Reduce campaign costs • Avoid customer fatigue

• Dynamically predict which offers are likely to appeal to individual customers
• “personalized” form letters • Avoid making irrelevant offers • Increase chances of customer response Enabled using BI Publisher with Oracle Data Mining SQL scoring
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Agenda
• • • • • Traditional vs. intelligent form letters Oracle BI Publisher and Oracle Data Mining Scenarios and approach Architecture Summary and Resources

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Oracle BI Publisher
• Enterprise reporting solution to author, manage, and deliver all types of highly formatted documents eliminating the need for costly point solutions • Reduces high costs associated with development, customization and maintenance of business documents • Increases efficiency of reports management • Leverages familiar desktop tools where users can create and maintain their own report formats based on data extracts from diverse sources • Rich Formatted Reports
• • • • Partner Reports Financial Statements Government forms Marketing materials e.g., Form Letters • • • • • Contracts Checks Labels XML / EFT / EDI Multiple destinations

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Classic Reports Customization
• 1 data set : 10 layouts : 30 languages >> 300 reports • Requires high skilled engineers for customization

High Maintenance Cost High Customization Cost Difficult Upgrade
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BI Publisher Customization
• 1 data set : 10 layout templates : 30 translation files • Business consultants use familiar desktop tools for layout customization

Report Templates

XSL

XML

EFT

XML Data

Report Output
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From Data to Destination

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Oracle Data Mining
Option to Oracle 11g Database • Sift through massive amounts of data to find hidden patterns and discover new insights • Understand the past, predict the future
• Take “reporting” to a whole new level

• Data Mining can provide valuable results…
• Identify factors more associated with a target attribute (Attribute Importance) • Predict individual behavior (Classification) • Predict or estimate a value (Regression) • Find profiles of targeted people or items (Decision Trees) • Segment a population (Clustering) • Determine important relationships with the population (Associations) • Find fraud or rare “events” (Anomaly Detection)
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Business Intelligence & Analytics
Query and Reporting
Extraction of detailed and roll up data “Information”
Who purchased mutual funds in the last 3 years?

OLAP
Summaries, trends and forecasts “Analysis”

Data Mining
Knowledge discovery of hidden patterns “Insight & Prediction”

What is the Who will buy a mutual average fund in the next 6 income of months and why? mutual fund buyers, by region, by year?

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Oracle Data Mining 11g
Oracle in-Database Mining Engine
• Data Mining Functions (Server)
• PL/SQL & Java APIs • Develop & deploy predictive analytics applications • Integrate with other Oracle products
Oracle 11g DB 11g
Data Warehousing ETL OLAP Statistics

Data Mining

• Oracle Data Miner (GUI)
• Simplified, guided data mining using wizards

• Predictive Analytics
• “1-click data mining” from a spreadsheet

• Wide range of DM techniques
• • • • • • • Classification & regression Clustering Anomaly detection Attribute importance Feature extraction Association rules (Market Basket analysis) Structured & unstructured data (text mining)
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Oracle Data Mining
Algorithm Summary 11g
Technique
Classification

Algorithm
Logistic Regression (GLM) Decision Trees Naïve Bayes Support Vector Machine Multiple Regression (GLM) Support Vector Machine One Class SVM Minimum Description Length (MDL) Apriori Hierarchical K-Means Hierarchical O-Cluster

Applicability
Classical statistical technique Popular / Rules / transparency Embedded app Wide / narrow data / text Classical statistical technique Wide / narrow data / text Lack counter examples Attribute reduction Identify useful data Reduce data noise Market basket analysis Link analysis Product grouping Text mining Gene and protein analysis Text analysis Feature reduction

Regression Anomaly Detection Attribute Importance Association Rules Clustering

Feature Extraction

NMF © 2008 Oracle. All rights reserved.

In-Database Analytics
Advantages
Oracle 11g DB
Data Warehousing

• Data remains in the database at all times…with appropriate access security control mechanisms—fewer moving parts • Straightforward inclusion within interesting and arbitrarily complex queries • Real-world scalability, performance, and availability
OLAP

ETL

Statistics

Data Mining

• Real-time scoring 2.5 million records scored in 6 seconds
on a single CPU system

• Pipeline results without costly materialization

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Agenda
• • • • • Traditional vs. intelligent form letters Intro to Oracle BI Publisher and Oracle Data Mining Scenarios and approach Architecture Summary and Resources

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Scenarios

• Response modeling
Generate standard form letter only to customers predicted most likely to respond using up-to-the-moment data

• Offer personalization
Personalize a form letter with customer-specific offer(s), also with up-to-the-moment data

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How do we do this?
Obtain historical data Obtain historical data with previous, known with previous, known customer response customer response outcomes outcomes Build/test DM models Build/test DM models to predict to predict offer interest offer interest Define DM predictive Define DM predictive SQL query in SQL query in BI Publisher over BI Publisher over customer data customer data

Write letter in Write letter in MS Word with content MS Word with content from query from query

Use BI Publisher Use BI Publisher Server Server to generate letters to generate letters

Evaluate Evaluate post-campaign post-campaign results results

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Getting the historical data
Use previous campaign data or collect new…
Customer Population for overall campaign

? ? ? ? ?

?

? ?

? ? ? ?

? ? ? ?

?

? ?

? ?

? ?

?

Starter Sample

? ? ?

Y N N Y N N

Take a sample

Run the starter campaign & get responses

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Combine responses with predictor attributes and build the model
Database Table with Predictor Attributes
e.g., age, income, interests

Target Attribute
response, no-response

Model
Y N N Y N N
Starter Sample Results

If … then Y If … then N

Combine results with predictor attributes

Build and test the model
e.g. Decision Tree automatically discovers rules

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Take predictor attributes of remaining customers and apply the model
Remaining Customers

? ? ? ? ?

?

? ?

? ?

Database Table with Predictor Attributes

Model If … then Y If … then N

Scores
predict response, no-response with probability

Apply the model

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Rank order customers by probability to respond or filter with probability cutoff
select cust_id, name, address,… from customer_scores where rownum < 1100 order by prediction desc, probability desc select cust_id, name, address, … from customer_scores where prediction = ‘respond’ and probability > .6

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Evaluate Post-Campaign Results
Y N Y N Count accuracy of predictions
Scores
predicted response, no-response

N Y

Y N

Y Y

Actuals
responded, did not respond, revenue, cost

Y Y N 400 75

N 25 600

Accuracy = (400+600) / 1100 = 90.9% ROI = e.g., total profit / total cost * 100%

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Scenario 1 Response Modeling
• Industry: Higher Education • Domain: Endowment Growth • Objectives:
• Increase success rate of alumni donations • Reduce costs by targeting only likely donors • Reduce alumni fatigue

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Dataset
ALUMNI_RESPONSE

Target
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Dataset Predictors + Target

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Build a Decision Tree Model using Oracle Data Miner

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Examine Decision Tree Rules
Corresponding to Alumni Segments/Profiles

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Examine Test Results for the Decision Tree Model

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What benefit do we get from the model?

Contact these first…

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Obtain model name from ODMr

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Predict alumni likely to respond

Check the query and view the scores…

select alum_id, prediction, probability from (select alum_id, prediction(ALUMNI_RESPON66882_DT using *) prediction, prediction_probability (ALUMNI_RESPON66882_DT using *) probability from ALUMNI_RESPONSE_9) where prediction = 1 and probability > .60

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BI Publisher Server
Create a database connection

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BI Publisher

Place ODM SQL query here. Returns only those alumni likely to respond to campaign.

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Generate XML from BI Publisher
And load via Word Pluggin to build form letter…

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Form Letter to customers expected to respond Upload template to BI Publisher Server

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Letters generated only for those alumni likely to respond to campaign.

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One step further…expected donation
• Build regression model to predict $$ donated • Rank alumni by expected donation
Expected donation = probability of response * predicted donated amount Target Attribute
donated amount

Select those alumni who responded

Prediction
donation amount

Model
y = F(x1, x2, x3, …)

Build and test the model
using SVM or GLM

Apply the model
to remaining alumni

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Expected Donation SQL
select alum_id, (response_prob * pred_donation) expected_donation from (select alum_id, prediction(ALUMNI_RESPON66882_DT using *) pred_response, prediction_probability (ALUMNI_RESPON66882_DT using *) response_prob, prediction (ALUMNI_DONAT43872_SVM using *) pred_donation from ALUMNI_RESPONSE_9) where pred_response = 1 order by expected_donation desc

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Scenario 2 Offer Personalization
• Industry: Retail • Domain: Electronics Direct Marketing • Objectives:
• Provide most likely relevant offers to prospects • Reduce costs by targeting only likely buyers • Reduce customer fatigue
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Dataset
CUSTOMER_OFFER Target

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Supplemental Data
OFFER

Name of predicted offer

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Product Offer – Decision Tree
Predict which offer a customer will accept

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Top offer for customer 100015
Check the query and view the results…

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BI Publisher Server
Specify “Data Model” with DM query

Place ODM SQL query here. Generates one offer per customer letter.

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Create Word RTF file with BI Publisher Template Builder

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After loading XML data format, drag and drop data field to the Word document.

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BI Publisher Server
• Upload RTF template to server • View generated letters

Note that the customer ID would be replaced with the customer name by joining with a customer table containing the actual names and addresses. This execution produced 1200+ letters personalized for each customer

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Top 3 offers per Customer
An offer letter can contain more than one offer. Test the query and view the results…then try in BI Publisher…

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MyCompany Offer Management Administration 1234 State Street Bloomington, IN 88888 Dear Mr. Jones, We’d like to make you an offer... • Save 20% on the TOWNE MP3 Player

Offers included specifically for Offers included specifically for “Mr. Jones”. These are “Mr. Jones”. These are predicted to be of most interest predicted to be of most interest to this customer. to this customer.

June 8, 2006

256MB Music MP3 Player Supports MP3 & WMA music files Transfer and store any type of file Customizable user settings (Equalizer, Backlight, Play Mode) PC and MAC compatible Connects to any USB port, no drivers required Includes AAA battery, carrying strap, headphones and USB cable • Save 30% on the PORTPLAY DVD Player Progressive-scan playback: When connected to a digital TV, this DVD player delivers smooth, enhanced progressive-scan (480p) images. Multi-format playback: DVD, DVD-R/RW, CD, CD-R/RW, MP3 and JPEG. A/V versatility: Component and S-video outputs deliver superior picture quality. Digital audio output: Experience crisp digital soundtracks through a digital coaxial cable. Convenience features: Aspect ratio selection, zoom/multi-angle functions, on-screen menu and more. • Save 50% on the purchase of 3 or more DVDs Popular titles available and USaveDVD.com We hope to hear from you. Sincerely, Offer Management Administration

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Agenda
• • • • • Traditional vs. intelligent form letters Intro to Oracle BI Publisher and Oracle Data Mining Scenarios and approach Architecture Summary and Resources

© 2008 Oracle. All rights reserved.

Architecture
Oracle DB EE Data Miner GUI Data Mining

BI Publisher Enterprise Server BIP Catalog

Template Builder MS Word
© 2008 Oracle. All rights reserved.

Summary
• Oracle Data Mining combined with Oracle BI Publisher facilitates targeted and personalized offer letters • Scoring customers using ODM models and SQL can be quickly and easily integrated with BI Publisher to prioritize offers on up-to-the-moment data

© 2008 Oracle. All rights reserved.

Resources
• Oracle BI Publisher
• http://www.oracle.com/technology/products/xml-publisher • http://wiki.oracle.com/page/Oracle+BI+Publisher

• Oracle Data Mining
• http://www.oracle.com/technology/products/bi/odm/index.html • http://wiki.oracle.com/page/Oracle+Data+Mining

• Oracle BIWA
• http://www.oraclebiwa.org

• Mark Hornick (mark.hornick@oracle.com) Data Mining Technologies, Oracle
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QUESTIONS ANSWERS

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