Big corporations have been using data to understand their customers better, enhance their marketing strategies and boost their profits for years. But the necessary tools and expensive licence fees have made this difficult for smaller businesses, who haven’t had the technical skills or funding to invest in accessing and analysing the data.
But the growth of open data, which is free to use and available to everyone, is changing this. Data and business expert John Murray explains how open data can be applied to marketing, highlighting case studies where open data has been used to boost direct marketing campaigns, optimise call centre performance, plan store locations and keep customers coming back.
John Murray is CEO of Fusion Data Science and a lecturer in Computer Science at the University of Chester. He has been involved in several successful data driven start-up businesses and has over 30 years’ experience of building customer information systems for predictive analytics.
Original Title
Friday lunchtime lecture: Open data: bringing small businesses into the big leagues
Big corporations have been using data to understand their customers better, enhance their marketing strategies and boost their profits for years. But the necessary tools and expensive licence fees have made this difficult for smaller businesses, who haven’t had the technical skills or funding to invest in accessing and analysing the data.
But the growth of open data, which is free to use and available to everyone, is changing this. Data and business expert John Murray explains how open data can be applied to marketing, highlighting case studies where open data has been used to boost direct marketing campaigns, optimise call centre performance, plan store locations and keep customers coming back.
John Murray is CEO of Fusion Data Science and a lecturer in Computer Science at the University of Chester. He has been involved in several successful data driven start-up businesses and has over 30 years’ experience of building customer information systems for predictive analytics.
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Big corporations have been using data to understand their customers better, enhance their marketing strategies and boost their profits for years. But the necessary tools and expensive licence fees have made this difficult for smaller businesses, who haven’t had the technical skills or funding to invest in accessing and analysing the data.
But the growth of open data, which is free to use and available to everyone, is changing this. Data and business expert John Murray explains how open data can be applied to marketing, highlighting case studies where open data has been used to boost direct marketing campaigns, optimise call centre performance, plan store locations and keep customers coming back.
John Murray is CEO of Fusion Data Science and a lecturer in Computer Science at the University of Chester. He has been involved in several successful data driven start-up businesses and has over 30 years’ experience of building customer information systems for predictive analytics.
Copyright:
Attribution ShareAlike (BY-SA)
Available Formats
Download as PPTX, PDF, TXT or read online from Scribd
John Murray Fusion Data Science Customer Profiling Customer profiling is not new. Big companies have been doing it for years. In early days, the preserve of the mainframe. Software tools and data products have evolved and become easier to use. External data sources such as Census and commercial data sources commonly used to augment existing data.
3 October 2014 CC BY-SA 2.0 UK 2 Applications of Customer Profiling Help to inform advertising purchase decisions. Identify new retail location sites and rationalise existing networks. Target new prospects through direct marketing. Identify factors leading to customer churn to improve customer loyalty and retention. Reduce fraud and defaults.
3 October 2014 CC BY-SA 2.0 UK 3 Analytical Software Specialist commercial analytical software: SAS SPSS MATLAB Open source analytical software R Project Octave 3 October 2014 CC BY-SA 2.0 UK 4 Commercial Data Products Geo-demographic segmentation systems: Acxiom Personicx CACI Acorn Callcredit Cameo Experian Mosaic Lifestyle and transactional data providers. Public registers: Shareholders Court judgements 3 October 2014 CC BY-SA 2.0 UK 5 What is Customer Profiling? A description of a customer or set of customers that includes demographic, geographic, and psychographic characteristics, as well as buying patterns, creditworthiness, and purchase history. (Business Dictionary) Customer analytics is a process by which data from customer behaviour is used to help make key business decisions via market segmentation and predictive analytics. (Wikipedia) 3 October 2014 CC BY-SA 2.0 UK 6 Customer Profiling Basics Typically customer profiling is presented statistically as a set of percentages or likelihood scores against behavioural and demographic attributes. In most cases the profile of a target group is compared with the profile of a base group. Key differences in these two profiles are identified and used to inform business decisions. 3 October 2014 CC BY-SA 2.0 UK 7 Target Group This may be all customers, or a selected group of customers identified by a characteristic. For example Respondents to direct marketing. High value customers. Lapsed customers. Fraudsters. Defaulters. 3 October 2014 CC BY-SA 2.0 UK 8 Base Group The base group of people to compare against. For example Non-respondents to direct marketing. Low value customers. Active customers. Trustworthy customers. Creditworthy customers. 3 October 2014 CC BY-SA 2.0 UK 9 Case Study Delicatessen in suburb of Chester. Offered newsletter and loyalty incentive scheme via in-store capture. 230 customer records in database. Wanted to launch home delivery service. 3 mile radius from store, south of river area only. 10,000 households in base are, wanted to target best 2,000. 3 October 2014 CC BY-SA 2.0 UK 10 Delivery Zone 3 October 2014 CC BY-SA 2.0 UK 11 Data Sources Customer Database ONS Postcode Directory (ONSPD) 2011 Census Datasets ONS Postcode Estimates (Headcounts) OS Open Data mapping products 3 October 2014 CC BY-SA 2.0 UK 12 Methodology Delivery zone postcodes matched to ONSPD to append Census Output Area identifiers. Customer database postcodes matched to above. Using ONSPD, customer profiles produced from Census variables expressed as percentage. Delivery zone profile weighted using ONS headcounts at postcode level.
3 October 2014 CC BY-SA 2.0 UK 13 Census Variables Used Age Household composition Age of children in household Tenure Occupation Type Social Grade Deprivation (from Census) Length of Residence 3 October 2014 CC BY-SA 2.0 UK 14 Profile of Social Grade 3 October 2014 CC BY-SA 2.0 UK 15 Profile of Occupation Type 3 October 2014 CC BY-SA 2.0 UK 16 Result 3 October 2014 CC BY-SA 2.0 UK 17 Optimise Call Centre Queues Call centre resources are expensive. Demographic data can be used to prioritise queues for resource optimisation: At peaks select priority customers Utilise slack periods more effectively Minimise no answer/unavailable calls
3 October 2014 CC BY-SA 2.0 UK 18 Call Time Preference V Employment 3 October 2014 CC BY-SA 2.0 UK 19 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% Employed Self-emp Retired Not working Methodology Enquiries from prospective customers received via the website. Census data used to estimate likelihood of preferred call time based on postcode built into a set of models. Call centre queues organised according to likelihood and availability of call centre resources (constrained optimisation) Feedback loop created from the dialler to improve performance of predictive models.
3 October 2014 CC BY-SA 2.0 UK 20 Result Reduction in unsuccessful calls 39% Equates to productivity improvement of 14% 3 October 2014 CC BY-SA 2.0 UK 21 Retail Location Planning Measure demographic profile of your existing stores. Use this to find other areas with similar profiles. Caution other factors are involved! Footfall, e.g. how much passing trade? Presence of competitor outlets
3 October 2014 CC BY-SA 2.0 UK 22 Specialist Golf Outlet 3 October 2014 CC BY-SA 2.0 UK 23 Methodology Extract all customers acquired in preceding 3 years within 45 minutes drive time of a shop. Convert these to proportions of population in each postcode sector (e.g. CH1 2). Build a predictive model using these as dependent variable, and census proportions as predictor. Apply the model to other areas where no present store presence.
3 October 2014 CC BY-SA 2.0 UK 24 Customer Loyalty Target group, lapsed customers (havent transacted in a period) Base group, current active customers. Append census variables. Identify customers most likely to lapse. Set up early warning system. Trigger reactivation event, such as offers. 3 October 2014 CC BY-SA 2.0 UK 25 Direct Marketing Target set: existing customers within 30 mins drive time. Base set: all adults in same area. Profile comparison. Strongest variables identified. Logistic Regression model built in R. Postcode level model used to drive door to door leaflet campaign. 3 October 2014 CC BY-SA 2.0 UK 26 Gains Table Incremental Analysis Cumulative Analysis Rank Base Target Index Base Target Index 1 5.0% 24.0% 479.9 5.0% 24.0% 479.9 2 5.0% 18.3% 365.7 10.0% 42.3% 422.8 3 5.0% 11.2% 224.3 15.0% 53.5% 356.7 4 5.0% 10.0% 199.9 20.0% 63.5% 317.5 5 5.0% 5.7% 114.2 25.0% 69.2% 276.8 6 5.0% 4.3% 85.7 30.0% 73.5% 245.0 7 5.0% 4.1% 81.6 35.0% 77.6% 221.6 8 5.0% 3.1% 62.5 40.0% 80.7% 201.7 9 5.0% 4.6% 92.5 45.0% 85.3% 189.6 10 5.0% 2.7% 53.0 50.0% 88.0% 175.9 11 5.0% 2.3% 46.2 55.0% 90.3% 164.1 12 5.0% 2.9% 57.1 60.0% 93.1% 155.2 13 5.0% 1.8% 35.4 65.0% 94.9% 146.0 14 5.0% 1.1% 21.8 70.0% 96.0% 137.1 15 5.0% 0.9% 17.7 75.0% 96.9% 129.2 16 5.0% 1.6% 32.6 80.0% 98.5% 123.1 17 5.0% 1.1% 21.8 85.0% 99.6% 117.2 18 5.0% 0.2% 4.1 90.0% 99.8% 110.9 19 5.0% 0.1% 2.1 95.0% 99.9% 105.2 20 5.0% 0.1% 2.0 100.0% 100.0% 100.0 3 October 2014 CC BY-SA 2.0 UK 27 Gains Chart 3 October 2014 CC BY-SA 2.0 UK 28 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Gains Chart Base % Target % Heat Map 3 October 2014 CC BY-SA 2.0 UK 29 Advertising Purchase Produce customer profile. Compare with profiles provided by media outlets. With radio and TV consider time of day. Use unique phone numbers/urls to track responses by media. Measure intelligence. 3 October 2014 CC BY-SA 2.0 UK 30 Software Tools Microsoft Office Excel Access Mapping Software ArcGIS MapInfo Microsoft MapPoint Open source software e.g. Quantum GIS
3 October 2014 CC BY-SA 2.0 UK 31 Conclusion Open data can help you: Improve business process efficiency. Reduce fraud and default. Retain your customers. React to market changes. Find new customers. Plan retail branch networks. Purchase advertising more effectively.