CRM at Ghent University

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1 CRM at Ghent University Customer Relationship Management at Department of Marketing Faculty of Economics and Business Administration Ghent University Prof. Dr. Dirk Van den Poel Updated April 6th, 2005 Topics Modeling cluster team members Examples of student/phd projects Clarification on the scope of our CRM activities CRM publications Churn analysis Cross-selling selling E-commerce Database marketing Ways for companies to cooperate & benefit from our expertise USP as compared to consultants Past & current CRM projects CRM software expertise Computing resources Conferences 1

2 Modeling Cluster (Members( Members) Status: : 2/3/2005 A team of 7 highly-motivated CRM specialists Members: (from left to right) Geert Verstraeten, Jonathan Burez, Bernd Vindevogel, Bart Larivière, Dirk Van den Poel Wouter Buckinx, and Anita Prinzie All members graduated from the advanced master degree Master of Marketing Analysis ( ). Examples of Student/PhD Projects Corona Direct, a direct writer (i.e. an insurance company selling g insurance products through direct channels such as the direct mail and the www), asked students in 2001 to optimize the process of customer acquisition.. By using quantitative database marketing techniques, we improved their mailing efficiency significantly. Satisfaction of companies with our projects often leads to extend previous studies. Therefore, in the Spring of 2002, we are analyzing multiple mailing strategies to further optimize their customer relationship r management (CRM) program. Delhaize,, the sixth largest retailer in the world, headquartered in Belgium, turned to us for a segmentation analysis of their loyalty cardholders. This was then linked to their behavioral characteristics to customize communication munication towards these segments, e.g., based on the product categories customers purchase from. AXA, a financial powerhouse as it is the merger of Anhyp, Ippa & Royale Belge. In 2001, we carried out a churn analysis of their customers. This s included a thorough analytical CRM analysis of who leaves the institution (as( a customer), how can the company prevent this from happening, what are key signals exhibited by customers who are likely to leave,. Given this succesful implementation, we are still extending this approach to the analysis of cross- sell behavior. This study tries to give insight into what products are likely to be the next purchases of individual customers. 2

3 Scope of our CRM activities We only focus on analytical CRM, i.e., the use of advanced analytical techniques to address interesting problems in the field of customer relationship management. This contrasts with operational CRM implementations such as Siebel TM, Oracle TM,. However,, in preparation of such analytical projects, we (teach as well as) carry out projects starting from the existing data warehouse/data mart until the final goal is reached. Moreover, we will only consider projects that provide added value both in terms of scientific output as well as profitability (or increased sales, depending on the business objective). CRM (Customer( Relationship Management) published research in scientific journals Churn PRINZIE A., VAN DEN POEL D. (2005), Incorporating sequential information into traditional classification models by using an element/position-sensitive sensitive SAM, Decision Support Systems (forthcoming) BUCKINX Wouter, VAN DEN POEL Dirk (2005), Customer Base Analysis: Partial Defection of Behaviorally-Loyal Clients in a Non-Contractual FMCG Retail Setting, European Journal of Operational Research, 164 (1), LARIVIERE Bart & VAN DEN POEL Dirk (2004), "Investigating" the role of product features in preventing customer churn,by using survival analysis and choice modeling: The case of financial ial services", Expert Systems with Applications,, 27 (2), VAN DEN POEL Dirk, LARIVIÈRE RE Bart (2004), Customer Attrition Analysis for Financial Services Using Proportional Hazard Models, European Journal of Operational Research, 157 (1), Cross-sell sell PRINZIE Anita & VAN DEN POEL Dirk (2005), Investigating Purchasing Patterns for Financial Services using Markov, MTD and MTDg Models, European Journal of Operational Research (forthcoming) BAESENS Bart, VERSTRAETEN Geert, VAN DEN POEL Dirk, EGMONT-PETERSEN M., VAN KENHOVE P., VANTHIENEN J.. (2004), Bayesian Network Classifiers for Identifying the Slope of the Customer-Lifecycle of Long-Life Life Customers, European Journal of Operational Research, 156 (2), , 523, E-Commerce/ClickstreamClickstream analysis VAN DEN POEL Dirk, BUCKINX Wouter (2005), Predicting Online-Purchasing Behavior, European Journal of Operational Research, 166 (2), 2005,

4 Published Research (Continued) Customer profitability LARIVIERE B., VAN DEN POEL D. (2005), Predicting Customer Retention and Profitability by Using Random Forest and Regression Forest Techniques, Expert Systems with Applications (under revision). Database marketing NEW: PRINZIE A. AND VAN DEN POEL D. (2005), Constrained optimization of data-mining problems to improve model performance: A direct-marketing application,, forthcoming in Expert Systems with Applications BUCKINX Wouter et al.. (2004), Customer-Adapted Coupon Targeting Using Feature Selection, Expert Systems with Applications (forthcoming). VAN DEN POEL Dirk, Predicting Mail-Order Repeat Buying: Which Variables Matter?, Tijdschrift voor Economie & Management, 48 (3), BAESENS Bart, VIAENE Stijn,, VAN DEN POEL Dirk, VANTHIENEN Jan, DEDENE Guido (2002), Bayesian Neural Network Learning for Repeat Purchase Modelling in Direct Marketing, European Journal of Operational Research,, 138 (1), Other NEW: LARIVIÈRE B. AND VAN DEN POEL D. (2005), Investigating the post-complaint period by means of survival analysis,, forthcoming in Expert Systems with Applications VINDEVOGEL B., VAN DEN POEL D., WETS G. (2005), Why promotion strategies based on market basket analysis do not work, Expert Systems with Applications,, 28 (3), VAN DEN POEL Dirk et al. (2004), Direct and Indirect Effects of Retail Promotions, Expert Systems with Applications,, 27, 1. JONKER J.J., PIERSMA N. & VAN DEN POEL D. (2004), Joint Optimization of Customer Segmentation and Marketing Policy to Maximize Long-Term Profitability, Expert Systems with Applications,, 27, 2. Visit or visit the complete list of publications by the Department of Marketing of Ghent University. Reports about Our Research in the Popular Press In Dutch: De Schryver N. & Van den Poel D. (2001), De relatie tussen marktgericht management en performantie, Marketeer,, november, nr. 5, p Larivière B. & Van den Poel D. (2002), Retentie als middel voor winst- optimalisatie voor financiële instellingen, Marketeer,, april, nr. 9, p Verstraeten G. (2002), Over de ijsberg die CRM heet..., Marketeer, april, nr. 9, p Buckinx W. (2003), Retentie analyse komt voor velen te laat, Marketeer,, februari, nr. 15, p Marketeer (the Belgian business journal for the marketing professional in Dutch/French French) 4

5 Two Ways for Companies To Cooperate & Benefit From Our Expertise Sponsorship of a PhD candidate Price per year: : 70,000 + hard/software cost Student project in the Master of Marketing Analysis Price for 5-month 5 project: : 15,000 See mma.ugent.be/mma_projects.htm Are you interested? please contact Prof. Dr. Dirk Van den Poel dirk.vandenpoel vandenpoel@ugent.be or USP of a cooperation with the CRM/modeling cluster We make CRM work for you using state-of of-the-art solutions and provide scientific output (see( list of our previous projects and scientific publications). 100 % of funding is reinvested in scientific research (people, soft- and hardware), we are a NOT FOR PROFIT organization. We are not linked to one software supplier, because we want to provide you with the best solution, not the solution that generates most money to us. 5

6 Past & Current Customers in CRM Projects PhD partners: Partners in student projects: Visit also the Master of Marketing Analysis project page for more information on other non- modeling (e.g. consumer behavior) student projects. Our CRM Software Expertise Platforms: 1. Linux, 2. Windows TM 1. SAS TM & SAS Enterprise Miner TM 2. Matlab TM 3. Fortran 4. R & S-Plus TM 5. GAUSS Database software: 6

7 Computing Resources Data preparation requires an IT infrastructure with substantial disk space as well as good throughput Analytics mainly require computational muscle. Therefore, we have a farm of over 30 dual- processor servers (mainly Linux) equipped with in total about 40 Tb of storage. Moreover, we now have access to a supercomputer (joint project with K.U.Leuven Leuven, Ludit) Conferences Data Mining II (Cambridge( Cambridge) VIAENE, Stijn,, BAESENS, Bart,, VAN DEN POEL, Dirk, DEDENE, Guido, VANDENBULCKE, Jacques & VANTHIENEN,, Jan (2000), Wrapped feature selection for binary classification Bayesian regularisation neural networks: : a database marketing application, in DATA MINING II,, N. Ebecken and C.A. Brebbia (editors), WITpress,, Data Mining III (Bologna,, September 2002) BUCKINX W., BAESENS B., VAN DEN POEL D., VAN KENHOVE P., VANTHIENEN NEN J. (2002), Using Machine Learning Techniques to Predict Defection of Top Clients.. A. Zanisi,, C.A. Brebbia,, N.F.F.E. Ebecken,, P. Melli (Eds), Data Mining III,, WIT Press, Southampton, Boston, VERSTRAETEN G., VAN DEN POEL D., PRINZIE A., VAN KENHOVE P. (2002), 2), Detecting sequential patterns for cross-selling selling fast moving consumer goods.. A. Zanisi,, C.A. Brebbia,, N.F.F.E. Ebecken & P. Melli (Eds), Data Mining III,, WIT Press, Southampton, Boston, Wessex Institute of VAN DEN POEL D., PRINZIE A., VAN KENHOVE P. (2002), Improving Response Prediction in Direct Marketing by Optimizing for Specific Mailing Depths.. A. Zanisi,, C.A. Brebbia,, N.F.F.E. Ebecken & P. Melli (Eds), Data Mining III,, WIT Press, Southampton,, Boston, Technology CRM conference (Rio de Janeiro,, December 2003) BUCKINX W. & VAN DEN POEL D. (2003), Manufacturer retailer promotion competition: customization of coupon target selection, Data Mining IV,, WIT Press, Southampton. LARIVIERE B. & VAN DEN POEL D. (2003), The impact of product features and intermediaries on customer retention,, Data Mining IV,, WIT Press, Southampton. PRINZIE A. & VAN DEN POEL D. (2003), Comparing alternative sequential analysis methods for cross-selling selling in financial services marketing,, Data Mining IV,, WIT Press, Southampton. VERSTRAETEN G. & VAN DEN POEL D. (2003), Quantifying credit scoring performance,, Data Mining IV,, WIT Press, Southampton. Data Mining Symposium organized by the Center for Statistics at Ghent University invited speakers include: : Leo Breiman, Jerome Friedman, David Hand, 7