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Types of Business Analytics (Recap)


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What is Customer Analytics?
What is the Challenge? Customer Analytics and Size of the Retailer Benefits of Customer Analytics to Retailers Customer Analytics Project Steps  Assessing Project Requirements  Data Extraction and Structuring  Choosing the Analytical Technique o The Predictive Model o Segmentation Techniques Application of Analytical Technique Presenting the Findings 27 Data Visualization Solutions Global DV Market Size: 2007 to 2011 Global DV Market by Vertical: 2007 to 2011 Global DV Market: Verticals Share, 2007 & 2011 Worldwide DV Manpower Demand & Supply

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Customer Analytics

Understanding & Predicting Customer Behaviour, thus improving Customer Relationship and increasing sales

Banks, Telcos Insurance FMCGs Banks, BFSI, Credit Card Large Dept. Stores, Malls, etc.

Financial Analytics

Understanding & Predicting Customer Behaviour w.r.t. Financial Products & Services, thus improving Customer Relationship and increasing sales
Understanding & Predicting In-store behaviour of Shoppers. Helps influence shoppers passively, through right Store Layout, Promotions, etc.

Retail Analytics

to increase online sales Specialised branch of Analytics dealing with the drug discovery process. with Web Sites Pharma Analytics Pharma Companies . starting from Raw Materials in a warehouse. It helps simulate the effects of Drugs. and Logistics Specialized branch of Analytics dealing with Website visitors and targeting them effectively. thus saving large amounts of money during the Testing phase All Orgs. to the finished Goods at the Retail Store Manf.Supply Chain Analytics Web Analytics Optimizing Stock Points and Stocking Levels.

including direct marketing. While Marketing is instrumental in satisfying customers. Key decisions may be made by means of the following techniques: • Market Segmentation • Predictive Analytics This information is used by businesses for a number of Business decisions. site selection and Customer Relationship Management. Thus. . Customer Analytics affects a company’s bottom lines. it is Customer Analytics that leverages a company’s existing customer relationship.Customer Analytics is the process by which data from past customer behavior is used to help make key business decisions. Customer Analytics plays a very significant role in predicting customer behavior as it is based on tried and tested managerial tools and past data on customer behaviour.

based on typical customer behavior and deviations from that behavior . These segments may be used to increase targeting methods. Such groups are used to enhance the predictive models as well as improve offer and channel targeting • Predictive Models. but may be divided into two main categories: • Segmentation Techniques. Ultimately. which segment groups of the customer base having similar spending and purchasing behavior. industry and application.Customer Analytics exploits customer behavioral data to identify unique and actionable segments of the customer base. Customer Analytics enables effective and efficient customer relationship management Customer Analytics techniques vary based on objective. which predict profitability or likelihood and timing of various events.

no idea about how to analyze the data Data Deluge from ERP/ Automated Solutions Turning the deluge of data into actionable information . at Organizations Usually.What’s Easy What’s Not Easy System is usually in place.

which feed Customer Analytics . so. the more complex and larger the retailer. the more it can benefit from a Customer Analytics solution.Usually. Usually. they would have reduced effectiveness. More Data Records = More Benefits from Customer Analytics Medium and Large organizations gain better benefits from insight into customer behavior as they have swift access to the customer behavior and patterns that enable retailers to optimize marketing and monitor promotion effectiveness. Smaller retailers have smaller samples to monitor. even if they did gather customer analytics. It doesn’t matter what vertical or space the retailer competes in: size and complexity are the most important factors for gathering statistics.

in the following areas: 1. Customer Satisfaction 2. Customer Retention 3.Customer Analytics enable Managers to make better-informed decisions that are based directly on data. thus increasing the Bottom Line of the organization . Better Target Marketing Each of these lead to additional sales opportunities with existing customers.

Assessment of Requirements Data Extraction & Structuring Choosing the Analytics Technique Applying Analytics Technique Presenting the Findings .

Data Miners MUST know the basics of the Business Process under Analysis 2.Step 1: Assessing Project Requirements Bring all concerned parties together and map the timelines of the Project Data Miners Set Analytical Objectives in line with all Departments’ Objectives Outcome(s) required from the Project 1. Objectives . Analytics Team MUST set Objectives in line with all Depts. Data Miners MUST clearly understand the different outcomes expected from the Analytics Project 3.

else the Project may give sub-optimal results 3. Heads 1. including any Customer interactions Understand the IT & DB Infrastructure . Participating Departmental Heads/ Staff MUST understand their Roles clearly 2. Participating Departmental Heads/ Staff MUST understand the IT and Database of the Organization. Participating Staff MUST facilitate all requirements of the Analytics Team.Dept.

predict future actions. Setting aside Time Series Samples (Control Groups) will also allow for marketing effectiveness tracking as well as the continued enhancement of the Customer Analytics Applications as well. purchasing. risk and customer service decisions and how those decisions influence customer behavior must also be tracked. It is also important to understand which of these interactions were marketing-driven and which were due to chance. Customer Behavioral Analysis. combined with increased marketing efficiency. Understanding the impact of marketing.Customer interactions include browsing. It is these interactions that may be used to develop customer profiles and eventually. will enhance future customer interactions. . The knowledge that a customer purchased due to a marketing campaign may be used to optimize future campaigns. paying and communicating with customer service or sales.

This leads to better Predictive Results .Step 2: Data Extraction and Structuring Identify all required Data Transfer all Data to a Central Database Structure Data Data Referential Integrity Data Consistency Data Indices and De-Duping It is preferred to store data in a Time Series. as true customer behaviour can then Be studied over time.

including various analytical software packages. . the TRP Ratings of the Programmes during which the Campaigns were displayed would be an important parameter.The most time-intensive part of the analytical process is data extraction and transformation. For example. Data Consistency. to the required structure. should not be lost during this merging and structuring! The best way to determine the transformations needed is to work backward from the event to be predicted (the Dependent Variable). have been optimized to complete this type of batch processing. list the behaviours that are known to indicate that potential action. Time of Broadcast. the original Database’s Referential Integrity. Other factors would be the Day of the Week when the Campaigns were run. if the effect of 3 different an Advertising Campaigns is to be compared. etc. etc.. Based on the modeling objective. However. as other tools. This process matches and aggregates the database sources into the final data set and is best completed outside the database environment.

so as to optimize Targetting .S t e p 3 : C h o o s i n g t h e A n a l y t i c a l Te c h n i q u e Analytical Techniques Predictive Techniques Segmentation Techniques Use previous Customer Data to understand past behaviour and predict future behaviour Used to place Customers with Similar attributes into distinct Groups.

after seeing the Ad? Continuous Events How much will Ms. or will he not buy the Car. after seeing the Ad? Logistic Regression Neural Networks Time to an Event How many months later should the Ad Campaign be aired? Hazard Models Ordinal Events How many times should the Ad be repeated? Once? Twice? Thrice? …? Poisson Regression .Binary Events Will Mr. Z spend on the Shampoo every month. X buy the Car after seeing the Ad.

When selecting techniques. other issues to consider are the number of variables selected and the model application environment. For instance.The Data Miner's experience is a primary driver. The Total Cost to implement an analytical solution should be taken into account. Several appropriate modeling techniques are typically available for each objective and tend to produce similar results. the best model may not produce the greatest ROI (Return on Investment). This may cause issues in future model scoring or implementation costs. Also. . in deciding which technique should be used. Neural Networks tend to choose more variables than Regression Techniques. if it contains expensive enhancement attributes or customer attributes that are very difficult to implement. when selecting the final model. if enhancement attributes are used.

Many times. e.: If age and income are the most predictive attributes. the final model variables may not be the best individual variables. Regression Techniques tend to see linear relationships well.as age increases.During the model build process.g. usually. one of these may not be selected in the final model because age is highly related to income . This overlap may actually create error. so does income. the optimal transformation and combination of variables must be determined (Data Reduction Techniques). based on the modeling technique used. while minimizing error. . The goal in Data Transformation and Reduction is to maximize the relationship between the variables used to predict the event (Independent Variables) and the event of interest (Dependent Variable). while Neural Network and other techniques are superior in noticing Non-linear ones. These techniques vary.

however. The verification data set may be a sample from the same time frame.Once the final model is selected. it should be verified with a separate data set. . if possible. Seasonality issues may also be explored with several verification data sets from different time periods. it is best to have several verification data sets from various time frames. Verification data sets from alternate time frames ensure that the modeled data set is a good representation of the customer universe.

. These groups also enhance the Predictive Models.Behaviour Variation in various Segments Quality of Results in Targeting efforts These Segments may be used to target product. channel and creative factors as well as several additional marketing and risk components.

Knowing whether to include the demographic data within the clusters requires knowledge of the customers and marketing requirements. if customer interactions are tracked and stored. Once the clusters are developed on the customer behavioral data. which help determine if a certain clustering system provides more "distinct" clusters. Clustering Techniques provide output statistics. . browsing and purchasing behavior. These techniques use all customer behavior data available to develop unique clusters that are similar in interest. Many companies deploy segmentation schemes by cherrypicking those in certain demographic attributes and using 5 to 10 groups as the basis for all marketing efforts. This is a good start.Segmentation techniques vary from age by income cells to full clustering systems. then additional demographic data may be appended to obtain a better understanding of the clusters. however. more sophisticated techniques are available.

Additional enhancement data may also be used. The update schedule varies based on customer volatility. it is a simple process of appending the data after the clusters are built. Each attribute used should provide information about the customers' interactions with the company. customer interaction frequency and data needs. then that data must be updated when the clusters are updated. then that demographic data may be used to describe the final clusters. to construct demographic profiles for each cluster. When demographic data is used to describe clusters. If the demographic data is used to build the clusters. the first step in all segmentation studies is to define the objectives with all departments and extract the data.Similar to Predictive Models. . however. If it is determined that the demographic data does not provide additional segmentation. the cost associated with that data should be considered when comparing clustering systems with and without the demographic data.

PCAs squeeze out much of the overlap across the input variables.When developing clusters. or less. If used properly. Clustering Techniques are powerful methods. to the final clusters. Standardizing the data allows each attribute to contribute the same information. it is best to standardize variables. if marketing or the data miner would like certain attributes to contribute more. they may be placed within the clustering technique of choice. After the attributes are standardized. Data Transformation Techniques are also available. The output of the PCA is then placed into the Clustering Technique. they will increase overall marketing effectiveness. . thus reducing error. If enough time is available. a Principal Component Analysis (PCA) should be completed.

If used in conjunction with Predictive Models. K-Means is a simple non-hierarchical method that is often used. Nearest Neighbors (Single Linkage). This allows for an up-and-running descriptive targeting tool that may be used to enhance the Predictive Modeling efforts. Knowing in which cluster(s) a customer resides places valuable information into the modeling tool because the clusters contain individuals with similar behaviour. .The various Clustering techniques include K-Means. it is best to develop the clustering scheme(s) prior to building Predictive Models. Farthest Neighbor (Complete Linkage) and Average Distance.

updating the clusters and storing the results back in the database. scoring the models. model application and scoring is best completed using a tool outside the database environment. .S t e p 4 : T h e A p p l i c a t i o n o f A n a l y t i c s Te c h n i q u e s Like Data Transformation. the scores and segments should be retained over time. Placing the scores and clusters in the database allows marketing. This allows for future analyses of how customers migrate from cluster to cluster or how their model scores increase or decrease over time. customer service and risk to use this information for all CRM decisions. In accordance with the time-series fashion of the data warehouse. transforming the attributes. It is this "change in behavior" that may be used to further enhance future models. This process includes extracting data.

the time required to apply the model and the time to complete the campaign process must be determined prior to selecting the model. however. The age of the data when it is available. Data Timing also refers to how recent the data must be to deliver the required power. The data warehouse loading interval must be considered during the model planning and application stages. In most instances. that requires more resources than it is worth. and verification samples must also be considered during the application process.Extract Data Transform Attributes Scoring the Model Updating the Clusters Storing Results Back in Database Predictive Modeling and Segmentation application issues tend to encompass Data Timing. . The most advantageous scenario would be working with up-to-the-minute customer interactions at the time of the proposed marketing or risk intervention.

one day old. The data recency analysis should compare the results of marketing and risk applications on data of various ages (e. . one week old. the business process should drive the data-driven decisions because spending valuable time to create a powerful model may not add efficiencies. Although it is the data and the analytical techniques that provide the segmentation. which drive long-term customer profits and customer loyalty.Additional analyses should be completed to compare the power of recent data to the resources required. especially customer behavioral data. etc. Data Recency is defined as the amount of time since the last activity with the customer.. It is these segmentations and predictions. Data.g.) Customer Analytic applications enable enhanced customer relations resulting in increased efficiency and customer profitability. The data warehouse and analytic applications deliver a suite of capabilities that drive revenue into the business units. Business processes can only be made more efficient when data about the process is captured and stored. known as Customer Analytics. allows analytical techniques to effectively segment and predict. two days old.

An entirely new breed of solutions called Data Visualization Solutions have emerged. to be really useful. processed. preferably in terms of understandable charts and graphs and in plain English. . correctly. the data has to be Understood by all stakeholders. simple-to-understand graphics (including Graphs. Flow Diagrams and other pictographic forms of presenting data. Unambiguously. simplifying the presentation of information gathered from various data sources into attractive. clearly.Step 5: Presentng the Findings Customer Analytics technology has today evolved to the point that mountains of Customer Analytics data can be accessed. However. Most modern BI and Customer Analytics solutions include graphicallyoriented Dashboard interfaces that leave the complicated back-end aspect of BI in the server room. in a form that is easily understood by everyone.

Customer Analytics are summarized and presented in a summary view that easily provides insight into the health of organizations that use them. They can alert you about a KPI that goes beyond set parameters. such as Customer Satisfaction and Loyalty. DV Solutions quickly provide managers with necessary information that can assist in decisions affecting the direction they provide for their employees. They deliver a look into the preferences of customers. For example. A good dashboard will reflect data in real time and allow for drill downs. which can help in upselling actions and targeted marketing campaigns. DV Solutions let you sift through the chaos to spot patterns and trends. which provide increased detail into a specific KPI. if sales drop below a predetermined level. an alert is sent to key employees who can intervene. which also indicate the causes and effects for measuring promotions and advertising. On the next slide. is a listing of 27 Data Visualization Solutions – proof that Data Visualization is indeed serious business! . DV Solutions also measure KPIs (Key Performance Indicators). It also should integrate with a retailer’s existing security protocols.When displayed by a good DV Solution.

6.org . including: MS Chart. Bubble.Cross-Browser JavaScript library for building rich Internet Applications that now includes Charts Flex .1.Google Chart API lets you dynamically generate Charts Sample Degrafa Dashboard Sample BirdEye Dashboard Sample Axiis Dashboard Sample ExtJs Dashboard Sample Dundas Dashboard . 12. 4. Column.Animated Flash Charts for Web Apps that appear to work with most technologies Google Chart API . Can be navigated with Keyboard or Mouse.Community project to advance the design and development of a comprehensive open source information visualization and visual analytics library for Adobe Flex. expressive. The actionscript-based library enables users to create multidimensional DV interfaces for analysis and presentation of information Degrafa – A declarative graphics framework for creating rich user interfaces. it is a concise. Ajax. DV.Built in Chart controls: Area.net and Dashboards for MS Silverlight ExtJs . graphics editing and more DojoX Data Chart . 8.Flexible Flash-based solution that allows creation of interactive and great-looking Flash Charts Axiis . Line. Gauge. etc.Provides Pivot Table Flex/ Flash components Rich Internet Application (RIA) development services FusionCharts .Primary purpose is to make connecting a chart to a Data Store a simple process Chronoscope – Suited to the visualization of thousands or millions of points of data. Bar. 5.Wide range of DV solutions for Microsoft technologies. Map and Calendar for . and modular framework for developers and designers to create compelling DV Solutions BirdEye . mapping. 7. 11. 10. 13. letting it work as a Google Gadget on Google Spreadsheets. Pie. 2. Plot. Flex uses FXG. 9. 3.Pure Javascript application framework for creating real-time collaborative applications that run in the Browser AnyChart . iGoogle and Open Social Dundas .Data Visualization Framework for Flex. a Graphical Interchange Format developed by Adobe FlexMonster Pivot Table and Charts . Candlestick. It has a Javascript API and a Google Visualization API.

JPowered . and Scatter Charts options 25. VisiFire – Yet another set of open source DV Controls. gRaphaël .Javascript Library that helps create stunning charts on Websites 15. Allows easy creation of Charts in different templates like Bar Charts. Column.JavaScript Chart Generator that requires little or no coding. and extraordinary visualization capabilities Sample gRaphaël Dashboard Sample JPowered Dashboard Sample Protovis Dashboard Sample iLog Elixir Dashboard Sample Kaps IT Labs Dashboard Sample yFiles Dashboard .NET .14.State-of-the-art software components for visualization of Networks and Diagrams. JSCharts .NET’s Charting abilities 26. yet robust library for transforming table data into Charts. iLog Elixir . Silverlight . ASP. Protovis . Candlestick Charts. Wind Plots. Kap IT Labs Diagrammer and Visualizer .Open source Flash charts 22.Microsoft Silverlight comes with the Bar.Simple to use.Enhance DV within Flex and AIR applications with IBM ILOG Elixir 16. or simple Line Graphs 19. powered by Microsoft Silverlight & WPF 27.Custom views of data with simple marks such as Bars and Dots. scales and layouts that simplify construction 24. Time Series Charts. MilkChart .Provides ready-to-use.PHP Graphing Scripts providing easy ways to embed dynamically-generated graphs and charts into PHP applications and HTML web pages 18. Pie Charts. Line. Line. allowing inheritance. and Meter Charts 17. WFP. Pie Charts. Telerik Charts for Silverlight. via Adobe SVG Viewer 23. enhancing MS Silverlight’s and ASP.Offers rich functionality and data presentation capabilities. Pie. High/ Low/ Open/ Close Charts. JFreeChart – Detailed Bar. Displays data as Graphs to better visualize connections 20. highly customizable multi-layout DV and diagramming for Adobe Flex and Air. unequaled automatic diagram layout. yFiles for Ajax . PlotKit . Uses HTML5 Tag 21. Unlike low-level graphics libraries that quickly become tedious for visualization. Open Flash Charts . Protovis defines marks through dynamic properties that encode data. cutting edge graph analysis.NET or Flex . .Chart and Graph Plotting Library for Javascript supporting HTML Canvas and also SVG.

6% 16. 2007 to 2011 8.7% 6.3% 2007 0.Year-on-Year Growth of the Data Visualization Solutions and Training Market.0% 4.9% 2009 2008 5.0% 2.0% 18.9% 6. India to Astir IT Solutions Inc.5% 2011 6.5% 13.5% 6.4 B and Training Market = $ 2.6% 7.1 B. Solutions Market = $ 19.1% 4.0% 10.8% 17.9% 6.0% 13.5% 7.3% 2010 6.7 B Source: Market Research Report prepared by WellOiledPC.0% 14.2% 14.0% 12.0% 8.0% Total Worldwide Data Visualization Market Growth (%) Data Visualization Training Market Growth (%) Data Visualization Solutions Market Growth (%) Base Figures: 2006 Total Market = $ 22..0% 16. USA .

7 23. USA .7 4.5 12.0 30.5 7.0 2.3 26.0 50.5 4. India to Astir IT Solutions Inc.1 10.0 12.8 5.0 3.4 5.0 60.0 20.5 11. 31.9 11.0 11.0 Defence and Government Vertical Industry and Business Vertical Total Worldwide Data Visualization Market Base Figures: 2006 Total Market = $ 22.1 B in 2006.7 3.0 5.0 70..5 3.5 22.Total Worldwide Data Visualization Market by Vertical.0 25.3 4.6 2.1 2007 2006 0.0 40.9 6. 2007 to 2011 2011 2010 2009 2008 13.0 31.2 5.4 6.6 29.9 5.5 B in 2011 Design and Engineering Vertical Medical and Scientific Vertical Source: Market Research Report prepared by WellOiledPC.0 3.5 6.

India to Astir IT Solutions Inc. USA .Source: Market Research Report prepared by WellOiledPC..

000 674.000 506.000 700. 2007 to 2011 310.000 545.. India to Astir IT Solutions Inc.000 2011 297.667 600.000 200.562 2006 100.000 500.000 300.510 2009 265.000 Total Software Manpower Demand Total Software Development Manpower Supply Source: Market Research Report prepared by WellOiledPC.000 800.000 586.143 2010 283.000 721. USA .953 2007 238.000 400.Worldwide Demand and Supply for skilled Software Development Professionals.770 2008 251.000 629.

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