Predictive Marketing for Banking

Transcription

1 Tony Firmani Predictive Analytics Solution Architect Predictive Marketing for Banking Business Analytics software

2 Session Overview Data Drives Decisions Applying Predictive Analytics Throughout Entire Customer Lifecycle Q&A 2 2

3 DATA DRIVES DECISIONS 3

4 For CEOs It s About Greater Customer Intimacy 88% 82% 85% of CEOs will focus on getting closer to their customers in next 5 years of CEOs want to better understand customer needs of CEOs require more visibility into their businesses Businesses are focused on understanding their customers to drive more/greater business value with their marketing spend 4

5 Clients do not trust banks to offer products and services that are in clients best interests Trust Gap Client Opinion: Providers offer products in the firm s best interest (Percentage of Survey Respondents 1 ) Provider Opinion: Providers offer products in the firm s best interest (Percentage of Survey Respondents 1 ) Strongly agree Americas Neutral EMEA AP n = 762 Strongly disagree n = % 60% 50% 40% 30% 20% 10% 0% 0% 10% 20% 30% 40% 50% 60% 70% Note: 1 Question asked: To what extent do you agree / disagree with the following statements about trust, Please rank on a scale of 1-6 where 1=strongly disagree and 6=strongly agree, Investment firms are likely to offer products & services in the investment firm s own best interest IBM / CFA Survey 2008; IBM Institute for Business Value analysis 5

6 Lack of information and current pace of business forces organizations to be overly dependent on intuition Nearly half said no Do you have sufficient information to do your job? 8% 39% Less extent How do you make business decisions? Personal experience and intuition 5% 15% Analytically derived 9% 28% Collective Experience 14% 35% 54% 46% Intuition dominates 43% 43% 7% Large extent Source: EIU launch survey for IBM BAO, 2009 Question 1: How often have you made major decisions with incomplete information or information you don t trust? Question 2: To what extent do you make business decisions based on the following factors? 25% 19% Guestimation has worked up to a point (arguably we ve passed it) 9% 6 6

7 Customer Intimacy Means Evolving Improving process and analytics goes hand in hand Business Operations Maturity How the business applies information to achieve its goals Policies Business Processes Organization Task integration Process automation and workflow Adhoc Business process integration and collaboration Foundational Spreadsheets Competitive Data warehouses, governance and production reporting Differentiating Master data management, dashboards and scorecards Breakaway Real-time analytical Impact Predictions, contextual business rules and patterns Source: Breaking Away with Business Analytics and Optimization:, Q Information and Analytics Maturity How the business manages information and learns from it

8 Data at the heart of Predictive Analytics High-value, dynamic - source of competitive differentiation Interaction data - / chat transcripts - Call center notes - Web Click-streams - In person dialogues Attitudinal data - Opinions - Preferences - Needs & Desires - Social Media Descriptive data - Attributes - Characteristics - Self-declared info - (Geo)demographics Behavioral data - Trades - Transactions - Payment history - Usage history 8 8 Traditional

9 What is Social Media Analytics? SMA is the use of insight, derived through social listening and predictive analytic techniques, and embedded within business processes, that enable an organization to more effectively interact with consumers by leveraging the collective intelligence of the global consumer community. 9

10 What does SMA allow customer to achieve? Grow their Business Understand their customer needs to target new offers and products more cost-effectively through different social media channels and then use SMA insight to predict impact of these introductions Enhance their Reputation Evaluate their corporate reputation and make evidence-based messaging decisions that target the right stakeholders at the right time and then use SMA insight to predict the impact on reputation Improve their Customer Care Respond more quickly with accurate, timely and relevant insight into customer requests to ensure a consistent brand experience across all channels and then use SMA insight to predict impacts on customer satisfaction Creating Relationships. Building Advocacy. Improving Loyalty 10

11 Predictive Analytics Predict impact of positive/negative sentiment on current business KPI s and future social media activities Predict impact on sentiment of messaging decisions with analysis into consumer and stakeholder sentiment; Predict impact of changes in perception of your corporate reputation, potential reactions to campaigns and business KPI s such as revenue, customer service levels, customer satisfaction Use predictive analytics to identify and target new social media channels to drive greater advocacy of your products and services with key influencers based on predictive analysis of sentiment Predict the effectiveness of your campaigns messages and their impact on consumers purchasing decisions, as well as the resonance and believability of their promise. Financial Data Customer Service Data Sales Data Marketing Data Third-party Data Association Clustering Classification Forecasting Produce Scores & Predictive Models Recommendations Impact of sentiment on KPI s Integrate with Social Media Optimization SMA Data Define decision optimization Scoring Business Rules Deploy Decision Make expert knowledge explicit Models Update Expert Knowledge Process Automation & Process Management & Control Optimization Monitor & manage analytics Automate prediction & process Perform Root-Cause deployment process Analysis Capture Predict Act Deploy Integrate Feedback SMA Execute Perform Social Media Campaign Prevent Pro-active manage reputation 11

12 APPLYING PREDICTIVE ANALYTICS DELIVERS THROUGHOUT ENTIRE CUSTOMER LIFECYCLE 12

13 How Banks Can Use Customer Data and Analytics Differentiate Positioning & Offers Improve Acquisition Gain Customer Insights Manage Churn, Cross-Sell Manage Risk Track Performance How to identify and define the right offer and positioning? How to leverage insights to acquire right customers? How to develop customers insights? How to grow the portfolio profitably? How to monitor and control Credit Risk? What KPIs/ reports are needed to effectively track business performance? How to establish potential market opportunity? What value proposition will help capture the potential? How to take the offers to market effectively? How to identify & acquire good customers? How to boost my acquisition efforts? How to understand customer usage and spend patterns? Based on what parameters should customers be segmented? What data is required? Who are the highvalue customers? How to retain these customers? What is the right product to crosssell/up-sell and to whom? How to improve underwriting? How to minimize credit loss while achieving growth? How to improve collection efficiency? How to integrate data in One-view mode? How to track risk performance? How to track campaigns performance? What KPIs / reports are required? 13

14 Smarter Planet Means Moving Away from the Broad Brush Impacting Customers Uniquely Throughout the Lifecycle One to One Research & Purchase Product Advocate Product Purchase More The Broad Brush Get Customer Service Use Product 14

15 Customer Intimacy Means Different Focus at Each Stage Marketing Social Intelligence Dialog Research & Purchase Product Advocate Product Purchase More Selection & Acquisition Sales Extension Feedback Get Customer Service Feedback Management Support Use Product Retention Support/Services 15

16 This Approach Supports Customer Lifecycle Management Needs Customer Life Cycle Management Segmentation Acquisition Portfolio Management Loyalty Management Retention /Attrition Enhance the understanding of customer base and market through inwardoutward (multivariate) segmentation Improve approval rate with application scorecard & acquisition through analytics led campaigns Deepen relationship with customers through up-sell / cross-sell of relevant products Loyalty programs and right campaigns to increase stickiness to the bank Retention campaigns to stem voluntary attrition Differentiate Positioning & Offers Improve Acquisition Gain Customer Insights Prevent Churn, Cross-Sell Risk Analytics Manage Risk Application/Behavior Scorecard and Strategy Collections Scorecard and management Recovery Scorecard and management Risk Strategy Manage risk across customer life-cycle Performance Management Track Performance Executive Dashboard to track all essential Business KPIs 16

17 Smarter Banks Outperform with Analytics Changes in industry require new disciplines and tools Variety Lack of insight Inability to predict Volume Volume Velocity Velocity Variety Inability to predict Volume Velocity Inefficient access Lack of insight Inefficient access Velocity Variety Sense and respond Instinct and intuition Skilled analytics experts Back office Automated Predict and act Real-time, fact-driven Everyone Point of impact Optimized 17

18 The Predictive Advantage Predict & Act Transformational Deployment of Predictive Models: Real-time Decision Management Optimized Outcomes Based Upon Objectives Deliver Cross-Sell Recommendations Dynamic Pricing Based Upon Risk and Profitability Models Insight Driven Predictive Analytics: Customer Segmentation Market Basket Analysis New Branch / Market Analysis Customer and Investment Risk Sense & Respond Traditional BI and Conventional Analysis: Branch Performance Profit and Loss Analysis Ad Hoc Analysis Product Performance 18

19 Business Scenario: With millions of customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an individual level? 19

20 Business Scenario: 20 With millions of customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an individual level? Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints 2010 IBM Corporation -

21 Business Scenario: High Profitability Med Profitability 21 Low Profitability With millions of customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an individual level? Segmentation Segment customers based upon profitability measurements Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints 2010 IBM Corporation -

22 Business Scenario: High Profitability Med Profitability 22 Low Profitability With millions of customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an individual level? Monitor & Measure Segmentation Segment customers based upon profitability measurements Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints 2010 IBM Corporation -

23 Business Scenario: Predictive Models Predict which products or services customers are most likely to accept 23 With millions of customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an individual level? Monitor & Measure Segmentation Segment customers based upon profitability measurements Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints 2010 IBM Corporation -

24 Business Scenario: Decision Management Optimize offers based upon profitability and response predictions Predictive Models Predict which products or services customers are most likely to accept 24 With millions of customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an individual level? Monitor & Measure Segmentation Segment customers based upon profitability measurements Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints 2010 IBM Corporation -

25 Business Scenario: Customer Interaction Deliver prioritized recommendations that drive increased profitability and are optimal for the customer Increase 25 With millions of customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an individual level? Decision Management Optimize offers based upon profitability, risk and response predictions Monitor & Measure Predictive Models Predict which products or services customers are most likely to accept Segmentation Segment customers based upon profitability measurements Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints 2010 IBM Corporation -

26 Business Scenario: Customer Interaction Deliver prioritized recommendations that drive increased profitability and are optimal for the customer Increase 26 With millions of customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an individual level? Decision Management Optimize offers based upon profitability, risk and response predictions Monitor & Measure Predictive Models Predict which products or services customers are most likely to accept Segmentation Segment customers based upon profitability measurements Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints 2010 IBM Corporation -

27 You need to the answer now or you lose Customer Leveraging Each Customer Contact as a Sales Opportunity Cross-sell? <context data> Potential Campaign Valid in this case? Predicted Profitability Response Probability Expected Value A No B Yes 90 54% 49 Yes 85 62% 64 C <customer data> 27

28 Customer Intimacy Moves Beyond Sales and Marketing Enhance Customer Understanding Customer Churn Marketing Spend Sales Productivity Optimize Real-Time Decisions Trading Advantage Client Interactions Customer Experience Foster Collaborative Decisions Customer Service Channel Management Research and Sales Enable Enterprise Visibility Risk Management Social Business Strategy Alignment 28

29 Key steps for achieving success Pick your spot Biggest and highest value opportunity Start with questions Prove the value Embed insights Add capabilities Continuous Value Delivery Information agenda 29 Source: Analytics: The New Path to Value, a joint MIT Sloan Management Review and IBM Institute of Business Value study. Copyright Massachusetts Institute of Technology 2010."

30 Questions? Thank You 30 30