soulful analytics: embracing gut instincts as part of the modeling, points

Soulful Analytics : Embracing gut instinct as a part of the modeling

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Objectives

Understand how big data is changing the

way we make decisions.

Understand what’s Soulful analytics.

Points case study.

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Leverage our LOYALTY COMMERCE PLATFORM to

facilitate growth and innovation with loyalty programs

PARTNER with leading loyalty Programs around the

world

Deliver multiple business applications through both

PRIVATE LABEL and POINTS’ BRANDED channels

Generate revenue by TRANSACTING POINTS for

retail margin, service fee or commission

LOYALTY COMMERCE PLATFORM

• Program Integration

• Member Validation

• Debit, Credit, Payment

• Marketing / Merchandising tools

• Promotions: cross / pre / post transaction

• Proactive vs. Reactive

• Management of marketing assets

• Pricing analysis

• Fraud management

• Distribution Partner Integration

• Data correlation (internal + external)

• Content Management

Points Current Core Business

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4

Points is the only company with transaction level access to

the world’s largest loyalty programs with +500 million

members

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200+ product deployments on 5 continents – transaction level access is a key strategic asset and barrier to entry

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Externalizing the Loyalty Commerce Platform for the future

3RD PARTY

ACCESS

LOYALTY COMMERCE PLATFORM

• Program Integration

• Member Validation

• Debit, Credit, Payment

• Marketing / Merchandising tools

• Promotions: cross / pre / post

transaction

• Proactive vs. Reactive

• Marketing asset management

• Pricing analysis

• Fraud management

• Distribution Partner Integration

• Data correlation (internal + external)

• Content Management

PAYMENTS/WALLETS

TRAVEL

RETAIL/ECOMMERCE

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GAMING SOCIAL

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Big Data has changed the decision making landscape

Real time decision making

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80% decisions made based on gut instinct!

58%

of respondents identify “Outcome from data” as a key analytics challenge

US executive says2.

“Sometimes in business there’s that gut instinct..how to take that

information and apply it to make business strategies work is one of the biggest challenges.”

1. Creating Business Value with Analytics. MIT Sloan Management Review.

2. Based on Analytics in action : breakthroughs and barriers on the journey of ROI.

Adoption rate of analytics2

Mean Decisions

How are Senior managers making decisions2

Analytics Maturity Components1 • Tools and expertise • Information management

practices • Analytics culture

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Points story - Right Offer, Right Time, Right Person, Right Channel

Increase transaction volume for Buy, Gift product during a month when promotion is in the market. With minimum number of emails.

Data Available - 700MM Data Points •Member demographic information. •Member transaction logs. •Communication logs. •Web logs.

Few known facts : • Average transaction size for each transaction. •Average response rate for current promotions and total number of emails sent.

•Conversion funnel for the product. •Current penetration in the market.

3 MM + Members

200K Transactions/Year

4 Average emails/month

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Business Objective

Analytics Goal

Predictive Model Development

Deployment Business Owner

Business Analyst

Data Science Build transaction volumes.

Find customers who have a high likelihood to buy

Data Findings : geographically all over the globe. Previous balance between 0K – 200K, Previous activity – Skewed on left.

Modelling decision – Throw it in a classification model and lets look at sorting.

Model result : Deploy to 1.5MM customers

The Waterfall Approach

?

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Lifts do not come with revenue guarantee!

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

1 2 3 4 5 6 7 8 9 10 all

Transaction rate Deciles charts

All Targeted

Offer No Offer

• Why 3 deciles? • What does lift represent? • What about other 60% left

out in deciles 4-10? • Is there a long term

impact? • REVENUE??? • Does it represent all the

customers?

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Model is good but ….

Lack of Comprehensibility

Lack of Confidence in model

Long delivery time

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Soulful Analytics : Embracing the gut instinct!

Business Objective

Business Goals

Success Metrics

Analytics Objective

Modelling Process

Business Tactic & ROI

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Defining Business Goals : First Step towards soulful analytics

Disintegrate business objective into specific goals

Business Analytics

Ask Questions to understand and disintegrate the problem

Provide analysis to understand the problem

Business Goal

Experience + Emotion

Data and Logic

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Defining Business Goals : First Step in the Partnership

Right Person

Customer Segments

First Time

2 txn’s Multiple

programs

>2 txn’s

Increase penetration,

moderate transaction

size

Increase

engagement in

multiple programs,

Very high transaction

size

Business

Expertise

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Right Offer

1.83%

1.37%

1.22%

1.05%

Average transaction rate by offer

Increase penetration in

customer with likelihood to

buy with “50% more” offer

Business Expertise

Increase overall campaign profitability

Increase Number of New Customers

Increase engagement of repeat purchasers

Analytics team is a partner in framing the goals.

Actionable business goal supported by data

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Models are based on tactics, not strategy.

Send PDC promotions to repeat customers

Send better and best offers to existing customers to

increase revenue.

Increase engagement for repeat customers

Target new purchasers using retargeting

Predict expected membership in other programs.

Model for offer response on these programs.

Rank customers based on their likelihood to buy next month.

Rank for all offers and find better and best offer response rates

Identify potential customers for retargeting using weblog data.

Rank on likelihood to buy

Increase Number of New Customers

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Modelling is incomplete without business validation!

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Are we aligned?

Value of

redemption

High mileage

balance

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Business Validation - Key ingredient for business buy in!

0

1

2

3

4

5

1 2 3 4 5 6 7 8 9 10

Mo

de

l li

fts

Deciles

Repeat Buyers Model

Baseline

Key variables Chart – D1

Last

Transaction

size

Number of

members # of redemptions

in last 2 years Card holder

7890 8490 2 5604

49924 6870 1 1393

72972 500 0 313

34815 4970 1 3619

185500 20 0 17

98384 200 0 15

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Business Goals

Success Metrics

Analytics Objective

Modelling Process

Business Tactic & ROI

Collaborate for cultivating the data culture!

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