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Analytics Consulting SAS Institute – Darius Baer, Jim Hornell, & Ross Bettinger
Copyright © 2004, SAS Institute Inc. All rights reserved. SAS is a registered trademark or trademark of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are registered trademarks or Trademarks of their respective companies
April 12, 2005
Beyond BI with SAS Analytics
Discuss the value of analytics as part of
the solution to business problems
Demonstrate two examples of using
analytics to solve business problems
Copyright © 2005, SAS Institute Inc. All rights reserved.
• • • • Why Analytics? Business Problems that can be addressed with analytics Analytic approaches to solving business problems Introduction to the two examples
Marketing Performance Optimization
Trade Promotion Optimization
Bank Call Center Text Mining Conclusion
Copyright © 2005, SAS Institute Inc. All rights reserved.
Volumes of Data – How to Extract Maximum Utility
Data Intelligence Information Knowledge
Advanced Analytics Drilldown
ETL Sums and Means Statistical Predictions
Exponential growth of Operational Decisions corporate data and computing power in the
past two decades
• ETL with sums and means provides hindsight from corporate measurements • OLAP with drilldown provides insight from the ETL data warehouse • Only advanced analytics with statistical predictions provides foresight from the ETL data warehouse
Data Availability + Computing Power + Advanced Analytics →
Competitive Advantage and Best Decisions
Copyright © 2005, SAS Institute Inc. All rights reserved.
Understanding the distribution around the mean and what contributes to that distribution is essential to compare populations and make predictions Interpreting the Variability of a Population Statistical techniques “predict” the future by apportioning variance in the population to explanatory variables As sales change over time in a well defined pattern. All rights reserved. Means are useful. future sales can be predicted If the likelihood of buying a product is associated with demographic characteristics. then we can predict how likely a particular individual is to buy that product With a goal of maximum profits and knowing constraints within which a company operates. 5 . we can solve a series of linear (or non-linear) equations to obtain an optimal solution Copyright © 2005. SAS Institute Inc.
SAS Institute Inc.The Problem Defines the Solution Business executives and analysts have always made operational decisions • Intuition and experience can be used • Sums and means can provide an historical direction • OLAP and drilldown can provide a better or more detailed perspective • Only advanced analytics can provide a sophisticated point of view on the future of the business The problem provides processes and parameters that must be addressed by the solution • How would you make the business decision if you did not have advanced analytics? • How can you structure your analysis to follow that process and use those parameters? Copyright © 2005. All rights reserved. 6 .
the business analyst could manipulate the trains and visualize on the screen • However. there was no guarantee of a “best” decision that produced optimal usage of the tracks to move the most freight in the minimum amount of time With analytics. SAS Institute Inc. 7 . one takes the problem and goal as stated above • One has constraints of the trains such as: Minimum and Maximum departure and arrival times Minimum and Maximum Speeds Departure and Arrival Stations Available routes • The goal is solved for using an OR algorithmic approach with PROC NETFLOW and visually represented on a screen • Interaction is provided to the user to modify the analytic result as desired Copyright © 2005. Railroad must have efficient schedules to move freight Problem Defines Solution – Example 1 • Before computers. All rights reserved. colored strings on a bulletin board were used – time on the X-axis and distance on the Y-axis • Constraints included no crossing of trains except at sidings and stations With computers.
• Using a linear regression approach in each of 98 agricultural districts with the following inputs: − Daily temperatures combined as necessary in day groups − Precipitation amounts grouped as appropriate − Records of previous years plantings With analytics. SAS Institute Inc. 8 . and looks over horizon to see if neighbors are planting their corn. one takes the problem and understands process • Each year and each district provide a regression equation • Using a model selection approach provided a limited set of predictive equations for the current year resulting in forecasts being within 2-3 days for 95 out of the 98 districts Copyright © 2005. Problem Defines Solution – Example 2 Herbicide producer wants to deliver time sensitive herbicide to farmers immediately prior to the planting of the corn • Chemical company uses hindsight as to when the farmers planted the corn in previous years • Business experts also have a “sense” for whether the planting will be earlier or later than previous years Since the problem is to know beforehand when the farmers will plant their corn → Go visit the farmers! • Farmer walks out of house in the morning and sticks wet finger in air to gauge temperature. All rights reserved. kicks dirt to gauge moisture.
e. 9 . Factor Analysis – how can we explain the largest amount of variance using statistical techniques Copyright © 2005. e. what are the future sales or demand based on history and other related factors SAS/STAT – Regression. SAS Institute Inc. which customers are most profitable and/or most likely to respond to an offer ETS and HPF – Forecasting.g.g.Analytic approaches to solving business problems The best solutions often involve the combination of a number of analytic techniques (as necessary) combined with business rules that also constrain the solution SAS/OR – Finds optimal solution in system of constraints Enterprise Miner – Predictive modeling.. ANOVA. All rights reserved..
advertising and other mass marketing tactics • What’s the optimum mix of marketing tactics? Bank Call Center Text Mining • Explore use of text mining to add value to Bank modeling efforts to predict attrition • Analyze call center comments for additional lift in predicting attrition from primary accounts Copyright © 2005. SAS Institute Inc. 10 . All rights reserved.Business Cases Marketing Performance Optimization / Trade Promotion Optimization • Understand and predict the ROI on promotions.
2005 Copyright © 2004. ® indicates USA registration. SAS Institute Inc.– MPO/TPO – Marketing Performance Optimization Trade Promotion Optimization Jim Hornell Analytical Consultant April 12. Other brand and product names are registered trademarks or Trademarks of their respective companies . SAS is a registered trademark or trademark of SAS Institute Inc. All rights reserved. in the USA and other countries.
retail pioneer in the late 1800’s Copyright © 2005. I just don’t know which half.John Wanamaker.“Half of my advertising is wasted. SAS Institute Inc.” -. All rights reserved. 12 .
SAS Institute Inc. with historically few answers Marketers have tried – for years – to understand and predict the ROI on promotions. advertising and other mass marketing tactics • How much does each marketing tactic contribute? • What is the effect of events and activities I cannot control? • What is the “right” level of spend? Overall? By tactic? • How do seasonality and geography affect results? • What’s the optimum mix of marketing tactics? Copyright © 2005.Questions. All rights reserved. 13 .
from a tactical to a more overarching and encompassing strategic function is well on the way. in ‘Consumer Goods Technology’. SAS Institute Inc. At this very moment…the question of full functionality is less of an ‘if’ .Michael Forhez and Charlie Chase. 14 . March 2005.“The transformation of TPM [Trade Promotion Modeling].’” -. in conjunction with MMM [Market Mix Modeling]. All rights reserved. Copyright © 2005. but ‘when.
15 . − In isolation − In combination • Consider any and all potential variables . All rights reserved. SAS Institute Inc.controllable and uncontrollable • Allow for changes in variables and desired outcomes with minimal effort • Predict future business outcomes based on specific marketing mix and promotional scenarios • Provide the platform for marketing mix optimization Copyright © 2005.The “When” is Now MPO/TPO is designed to: • Calculate the business impact of multiple marketing channels.
MPO/TPO Standard Solutions MPO/TPO Analytic short-comings Too fragile Inflexible Fixed in time Not forward looking Calculates impact of multiple variables – alone and in combination – extremely robust Analytic framework exists Change input and target variables as needed marketplace activity Accounts for changing Designed to be forward looking – predicts future outcomes 16 Copyright © 2005. SAS Institute Inc.Standard solutions vs. . All rights reserved.
The MPO/TPO Offering Foundational elements include: • Flexible data model • Model automation procedures • User interface elements − Interactive − Web based • Executable Master Marketing and Promotional Plan • Marketing campaign scenario forecasts to test effectiveness and cross product cannibalism Customized elements include: • Client-specific data inventory • Coverage of client specific markets and segments • Coverage of client specific products • Customized interface reflecting client needs Copyright © 2005. All rights reserved. SAS Institute Inc. 17 .
on marketing performance • Product transaction data • Advertising data • Promotion data • Direct marketing data • Econometric data • Demographic composition and segment distribution • Share of market • Share of voice • PR activity • Event / sponsorship activity • Distribution data • Brand data Copyright © 2005. The MPO/TPO offering considers the effect of multiple variables. All rights reserved.Sample Variables for a Financial Client across multiple geographies. 18 . SAS Institute Inc.
IRI) • Shipment and Order history • Promotion calendars • Fund allocations • Pricing • Brand/category/market development index The MPO/TPO offering considers the effect of multiple variables. across multiple distributors. All rights reserved. SAS Institute Inc.Sample Variables for a CPG Client • Syndicated data (AC Nielsen. on trade promotion performance Copyright © 2005. 19 .
The User Interface Copyright © 2005. SAS Institute Inc. 20 . All rights reserved.
SAS Institute Inc. All rights reserved. .Accesses the Modeling Procedure Assimilates past business history using: • Singular Value Decomposition • Linear regression with Lagged Values • Dynamic Neural Network Modeling By correlation rather than causal modeling Resulting in Week by Week Forecasts over your planning horizon. 21 Copyright © 2005.
150/pt 641/pt 2.500 2.Which Links Business Results to Advertising and Promotional Expenditures Market Volume Lift Incremental Volume Lift New York Boston Philadelphia 9. All rights reserved. 22 .855 2.200/pt 42.676/pt 1. SAS Institute Inc.378 5.322/pt Moving away from a growing condition towards a plateau condition: Rat Lift e Incremental Lift = 0 Sales Volume Lift vs.400/pt 41. Spend Insight: Different market areas demonstrate varying upside ad potential Copyright © 2005.
000 (held constant) $MM Improvement in Trade Spend % of Marketing and Promotions Impacted: 25% – 35% – 45% based on prior client experience 10-20% improvement 10% 15% 20% % Improvement Copyright © 2005. All rights reserved.000. SAS Institute Inc.The Value Equation Estimated Benefits $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 $0 % of Impacted Promos 45% 35% 25% Assumptions: Marketing Trade Spend: $100. 23 .
Computer Sciences Corporation Copyright © 2005. 24 . All rights reserved.Delivery and Implementation SAS Software Foundation and Analytics Consulting for customization to business needs • Requirements − Client data access − Customized analytics − Customized reporting • Design • Customized Development • Testing. SAS Institute Inc. and Installation With Domain Partners • THMG. Thompson Hill Marketing Group • CSC. Documentation.
sophisticated modeling. partners. Advertising and promotional spending is coming under increased scrutiny The Commencement of a New Era Getting the spend “right” is a complex problem More and more data are available • Robust data management. and experience to make this work Questions?? Copyright © 2005. SAS Institute Inc. 25 . All rights reserved. and content expertise are ‘must haves’ to predict results and optimize spending SAS has assembled the right software.
Bank Call Center Text Mining Ross Bettinger Analytical Consultant April 12. 2005 Copyright © 2004. in the USA and other countries. SAS Institute Inc. Other brand and product names are registered trademarks or Trademarks of their respective companies . SAS is a registered trademark or trademark of SAS Institute Inc. All rights reserved. ® indicates USA registration.
All rights reserved.Text mining can reveal hidden concepts not previously known How Can Text Mining Add Value? Clusters of terms may contain information about a customer’s behavior unavailable from structured data decisions Information content in clusters can be used to inform business • Warranty: Do I see a trend of product failures from customer comments? • Surveys: What do employees say about the reorganization? How do we use that information to improve employee productivity? • Medical: Are the proper medications being prescribed for patients based on their verbal statements to the doctor? • Insurance: What are the characteristics of fraudulent claims based on the text on the claim? • Call Center: Do I have enough drop-down categories to cover the information I get from the free-form fields? • Marketing: What are my customers thinking? What are their wants and needs? Copyright © 2005. SAS Institute Inc. 27 .
28 . SAS Institute Inc.Objective Explore use of text mining to add value to Bank modeling efforts to predict attrition • Loss of deposits less money to loan at interest adverse impact on Bank’s profits Analyze call center comments for additional lift in predicting attrition from primary accounts • Information in unstructured text may add significant value to model performance when combined with “traditional” data mining practices Copyright © 2005. All rights reserved.
Assess Discuss results of exploratory data analysis to justify sampling approach • Unusual properties of Bank call center data require creativity Build DM and TM models • Compare individual DM. DM + TM model Copyright © 2005. All rights reserved. Modify. TM models. 29 . Explore. SAS Institute Inc.Agenda Discuss SEMMA methodology to build predictive attrition models • Sample. Model.
000 accounts in good standing 9. 2003 (Numbers altered for confidentiality) May.500 involuntary attritors (0.47% attrition rate) 4. SAS Institute Inc.73% attrition rate) -----------613.Sampling Bank call center data collected from June.000 records at account level supplied to SAS • Chose existing primary customers (750.000 voluntary attritors (1. All rights reserved. 2003- • 900. .000 records) • Multiple calls per account required consolidation of data and comments to single account-level observation − After consolidation: 600.500 accounts used in analysis 30 Copyright © 2005.
30% Direct Mail • Strong concentration of comments into few classes will affect performance of text mining models Copyright © 2005.Exploratory Data Analysis Findings • Attritions are a “rare event” (voluntary attrition rate = 1. 31 .47%) • Significant imbalance in comments − 40% Blank. SAS Institute Inc. All rights reserved.
SAS Institute Inc. we will assume that these two kinds of comments may be removed without affecting the analysis so that other comments may “speak” Copyright © 2005. 32 . All rights reserved.EDA (continued) Observe similar distribution of comments in voluntary attritor. nonattritor comments Since distribution of comments and “Direct Mail” is similar.
SAS Institute Inc. All rights reserved. 33 . good accounts Blank comment Mostly Direct Mail Terms Omitting blank and “Direct Mail” comments eliminates imbalance in comments.EDA (Text Mining Node) Using complete data produced two clusters • 20% sample of voluntary attritors. reveals more clusters (20% sample) Copyright © 2005.
N_Phone_Calls were transformed − For example. 34 . 75+ Copyright © 2005. 38-75. Cust_Tenure_Mo.Modify Perform “optimal binning” of interval variables with respect to target variable to change them into ordinal variables • Represent continuous variable as set of ordered indicator variables to better concentrate target variable into small number of bins • Variables Age_Yrs. 24-38. All rights reserved. Age_Yrs was binned into following intervals 0-24. SAS Institute Inc.
All rights reserved. SAS Institute Inc. randomly-selected nonattritors (N=9.000). 35 .000) • Data Mining model (no text-based information) • Text Mining model (only text-based information) • Hybrid Data + Text Mining model − structured data + structured text-based information Copyright © 2005.Model Modeled voluntary attrition to predict who would deliberately close account Partitioned data • 50% Training / 25% Validation / 25% Test (Holdout) Built stratified models based on voluntary attrition • Used all voluntary attritors (N=9.
SAS Institute Inc.3808 .4135 .6632 .Assess Results for test (holdout) dataset Model • DM • TM Node NN Tree Misclas AUC .3840 .6578 − Misclas is misclassification rate − AUC is area under ROC curve − Lift is top 5% lift Hybrid model has similar misclassification rate.56 1.5884 Lift 1.28 1. All rights reserved. 36 .62 Best Model • Hybrid NN . AUC as DM model but higher lift Conclude that combining DM + TM provides strongest performance in predicting voluntary attrition Copyright © 2005.
Text Miner. All rights reserved. “Direct Mail”.Applying Results of Text Mining Combine blank.clustered comments to determine voluntary attrition “lift” Copyright © 2005. 37 . SAS Institute Inc.
birth of child.Applying Results of Text Mining (cont’d) Use cluster membership as “trigger” • Cluster 3 has lift of 4.37 − Terms: – Trigger is financial distress: bankruptcy Copyright © 2005. SAS Institute Inc. buying a home.59 − Terms: – Trigger is life cycle event: marriage. … • Cluster 5 has lift of 2. All rights reserved. death. 38 .
Text Miner. SAS Institute Inc. “Direct Mail”.clustered comments to determine involuntary attrition “lift” Copyright © 2005.Applying Results of Text Mining (cont’d) Combine blank. All rights reserved. 39 .
SAS Institute Inc. 40 . All rights reserved.Concept Linking Which terms are related to “dep”? Copyright © 2005.
All rights reserved. 41 . SAS Institute Inc.Value Proposition Use Enterprise Miner to extract information from “structured” data Use Text Miner to turn “unstructured” text into “structured” data for “traditional” data mining Use Enterprise Miner and Text Miner give you an unbeatable combination for business advantage Copyright © 2005.
42 . Beyond BI with SAS Analytics Copyright © 2005. All rights reserved. SAS Institute Inc.Conclusion Hindsight with ETL and Sums & Means is Good • Important to get a view into your data Insight with OLAP and Drilldown is Better • You obtain a better sense of where your business is now and at whatever level of summary or detail you want Foresight with Analytics is Best • You obtain a confidence of where your business is going in the future so that you can take appropriate action now to be prepared.
SAS Institute Inc.Copyright © 2005. 2003. All rights reserved. 43 .
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