Heather Avery
Manager, Business Analytics
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40% of executives use “good ole’ gut” for major corporate decisions
Why?Data not available
Workforce challenges (i.e. “insufficient quantitative skills in employees” and “shortage of analytical talent”)
72% of executives “striving to increase their organization’s business analytics and BI use.”Source: July 2008 Accenture Survey of 250+ Executives
http://advice.cio.com/thomas_wailgum/to_hell_with_business_intelligence_40_percent_of_execs_trust_gut
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Review key steps for establishing and executing a customer retention analytics solution
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Assessing People Resources
Assessing Data & Technology
Defining Key Metrics
Gauging Performance
Identifying Sources of Impact
Using Predictive Modeling
Challenges and Lessons Learned
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Soft Skills: • Action Oriented • Adaptability• Customer Focus• Ethics/Values• Integrity & Trust• Listening• Communication • Decision Making• Planning/
Organizing
Hard Skills: • Data Mining• Data Analysis &
Interpretation• Database
Development• Research &
Benchmarking• Cognitive
Reasoning• Math Fundamentals• Math Problem
Solving
Software: • MS Suite (Access,
Excel, PowerPoint, Word)
• Business Intelligence Tools (i.e. Business Objects, Cognos)
• Statistics Packages (i.e. Excel Analysis ToolPak, Minitab, SPSS, SAS)
Education:• Mathematics• Statistics• Computer Science• Business
Administration
Experience: • Lead Analyst:
Minimum 2-3 Years• Support Analyst:
Minimum 0-2 Years (Lead Analyst Guidance Required)
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• MS Office Software (Word, PowerPoint, Excel, Access)
• Math Fundamentals
• Math Problem Solving
• Cognitive Reasoning
Assessments
• Tailored to probe for desired skill sets
• Step-by-step description of how desired skills are applied
• Being mindful of positive and negative themes
Behavioral Based Interview
Guides
• Reporting and/or executive summaries with insights demonstrating analytical capability
Prompting for Samples of
Work
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• DB2, Oracle, SQL Server, Access 2007Collect & Store Data
• Business Intelligence Tools (i.e. Business Objects, Cognos), Access, Excel, Crystal Reports Summarize/Report Data
• Access, Excel, SPSS, Minitab, SAS, Analysis ToolPak (Excel Add-In)Data Mining and
Analysis
• Communicated results should include a combination of reporting overall results with additional insights gleaned from data mining and analysisCommunicate Results
• Does the logic for your success metric(s) remain sound?
• What are the latest techniques used for data mining and analysis?
Regularly Evaluate Approach
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Establish Intent of Measure
• What % of customers do we retain over time?
Develop Prototype Metric
• Customer Retention Rate
Define Metric
• The percent of active customers that exist at the beginning of a given time period AND remain active at the end of a given time period.
Establish Calculation
• 1 – (net # of customers lost / ( ending balance of active customers + net # of customers lost) ) * 12
• Reported monthly, YTD, and QTD – all figures are annualized
Document Source(s)
• Business Intelligence Tools used to extract data from customer tracking system
Seek Input from Stakeholders
• Business Areas
• Financial department
• Information Technology department
• Actuarial department
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• DB2, Oracle, SQL Server, Access 2007Collect & Store Data
• Business Intelligence Tools (i.e. Business Objects, Cognos), Access, Excel, Crystal Reports Summarize/Report Data
• Access, Excel, SPSS, Minitab, SAS, Analysis ToolPak (Excel Add-In)Data Mining and
Analysis
• Communicated results should include a combination of reporting overall results with additional insights gleaned from data mining and analysisCommunicate Results
• Does the logic for your success metric(s) remain sound?
• What are the latest techniques used for data mining and analysis?
Regularly Evaluate Approach
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• DB2, Oracle, SQL Server, Access 2007Collect & Store Data
• Business Intelligence Tools (i.e. Business Objects, Cognos), Access, Excel, Crystal Reports Summarize/Report Data
• Access, Excel, SPSS, Minitab, SAS, Analysis ToolPak (Excel Add-In)Data Mining and
Analysis
• Communicated results should include a combination of reporting overall results with additional insights gleaned from data mining and analysisCommunicate Results
• Does the logic for your success metric(s) remain sound?
• What are the latest techniques used for data mining and analysis?
Regularly Evaluate Approach
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Economic Factors• Disposable income• Consumer share of wallet• Consumer confidence• Conditions by industry sector
Competitive Landscape• New entrants• Competitor offerings and value
proposition• Competitor messaging and sales tactics• Third party relationships (i.e. brokers)
Industry Factors• Healthcare reform• Federal/state mandates• Category perceptions
Product / Service Offering• Products/benefits offered• Price structure and value perception• Value added services
Brand / Corporate• Image• Reputation• Financial stability
Service – Internal Operations• Service levels/standards• Service tools and capabilities• Internal initiatives
Sales / Marketing• Distribution channels• Advertisement and messaging• Bids and proposals• Mix of business (i.e. new sales,
product mix, demographics)• Field skills/turnover/incentives
Service – Field Force• Service tools and information• Service levels/standards
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Industry
• Auto
• Banking Institutions
• Construction
Geography
• North
• South
• East
• West
Products
• Widget A
• Widget B
• Widget C
Tenure
• <13 months
• 13–24 months
• 25–36 months
• >36 months
Revenue
• Top 80%
• Next 15%
• All other
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Which Widget more negatively impacts the overall figure?
Overall Widget A Widget B Widget C
86,5%
91,6%
87,1%
83,0%84,4%
90,3%
85,2%
79,5%
2008 2009
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Overall Widget A Widget B Widget C
86,5%
91,6%
87,1%
83,0%84,4%
90,3%
85,2%
79,5%
2008 2009
The distribution of active business by product line
must be consideredWhich Widget more negatively
impacts the overall figure?
29,7%
56,1%
14,2%
Widget A
Widget B
Widget C
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29,7%
56,1%
14,2%
Widget A
Widget B
Widget C
Overall Widget A Widget B Widget C
86,5%
91,6%
87,1%
83,0%84,4%
90,3%
85,2%
79,5%
2008 2009
The distribution of active business by product line
must be consideredWhich Widget more negatively
impacts the overall figure?
Impact (1 Retention Rate) Product Distribution % Total Volume
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Modeling ConsiderationsAbility to project future performance assuming the current trends continueAbility to project future performance if distinctive shifts in mix of business are expected/planned
Building a Predictive ModelIdentify primary attributes affecting customer retention metrics (i.e. attributes like industry, products, tenure of customer)Conduct regression analysis using several years of historical data to quantify the relationships that existUtilize regression equation to forecast customer retention trends and allow for scenario modeling – user input should be allowed
– Marketing of a new product will change the distribution of your total active business
– As long as the retention rate of the new product is not equal to the overall retention rate, it WILL impact the overall retention rate as the proportion of the new product increases; assuming everything else remains the same
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• Establish a buddy system
• Distribute workload
Having only one assigned resource can cause “burn-out”
• Institute a validation process
• Confirm cyclicality of results
• Research system issues/glitches
• Determine if process changes occurred
Opportunity exists to make snap decisions with one month’s worth of unusual results
• Establish appropriate timelines and channels for communicating initial results and detailed findings
Data mining & synthesizing takes T I M E
Thank you