data analysis to discover hidden target markets
TRANSCRIPT
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SAB Banking Co.Optimizing Campaign Resources through Segmentation
Bhaskar Nandina, Kristen Smith, Sandra Folkesson, Ye YuanDecember 16, 2015
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Expensive and Inefficient Campaign Deemed a Failure
SAB Banking Co. has been running non-targeted direct marketing campaigns.
The campaign achieved an 8.83% response rate and cost €1.2 million
SAB Management set goal of 15% response rate for success from new customers..
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Tasked to Analyze Campaign and
Define SegmentsEconomic Downturn –
Need to Efficiently Gain Customers
Term Deposit Subscription Campaign
Failed Response Rate
Analyze Data - Identify Patterns
Define Segments – Future Campaigns
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Prospect and Socio-Economic Data
Age
Job
Time spent on the ‘last’ call
Number of times we called them
How we called them
Euro Lending rate
Consumer Price Index
Consumer Confidence Index
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The Average Customer
40 years oldSpeaks for an average of 4.3 minutes on every call
Receives a call at least twice before answering
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Combine Methods for Optimum Results
CLUSTERINGDECISION TREE REGRESSION ANALYSIS
Estimate Duration Identify Economic SegmentsModel Decisions
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Duration and Lending Rate are Best Predictors for Success
87.57% say “yes” when call lasts longer than 8
minutes
93.78% say “no” when European Lending Rate > 3.37% and call lasts less
than 8 minutes
Node 1Balanced Data
50% Yes & 50% No
Node 2No Training: 68.58%
No Validation: 66.78%
Node 4Yes Training: 65.36%
Yes Validation: 69.05%
Node 5No Training: 93.78%
No Validation: 94.82%
Node 3Yes Training: 87.57%
Yes Validation: 86.58%
Duration
<471.5 or Missing >= 471.5
European Lending Rate
>= 3.27or Missing<3.27
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Longer Durations and Lower Lending Rates Drive Success.
Impact of Economic Factor: 99.36% Failure Rate when European Lending Rate >3.27% and the call lasts less than 8 minutes
Node 1N = 35563
No: 91.17%
Node 2N = 30833
No: 95.67%
Node 4N = 7381
No: 83.93%
Node 5N = 23452
No: 99.36%
Node 3N = 4730
Yes: 38.16%
Duration
<471.5 or Missing >= 471.5
European Lending Rate
>= 3.27or Missing<3.27
Impact of Duration: 38.16% Success Rate when call lasts 8 minutes or longer
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Regression is not Actionable
Unable to predict customers whose duration will be greater than 8
minutes.
Relationships Exists
Low – Predictability
R-Square = 0.0135
Explains only 1.35% Variation in Duration
Significant at 0.0001 significance level
Contacted by Cell Longer Duration
More Previous Contacts Shorter Duration
All Socio-economic Variables Statistically Significant
Insights from Regression
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The Three Natural Segments
Non-Hierarchal Method to cluster data into 3 groups which explain 66% of the variation in the data
Group 1Group 2
Group 3
Name of observation or cluster
Sem
i Par
tial R
Squ
ared
Hierarchal Clustering reveals 3 groups
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Success Rate Varies with Segments
Period No. of People Contacted No. of People responding “yes”
Favorable 1,582 590
Unfavorable 26,947 1,311
Moderate 7034 1,240
Unfavorable Period
Moderate Period
Favorable Period
Count of Records
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Lower European Lending Rate during Favorable Period
Period Range of European Lending RateFavorable 0.634% to 1.085%
Moderate 1.303% to 3.81%
Unfavorable 3.853% to 5.045%
Average Euro Lending Rate
Unfavorable Period
Moderate Period
Favorable Period
EUROPEAN LENDING RATE
0.80
4.837
1.303
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Occupation affects DurationAv
erag
e Ti
me
spen
t to
say
YES
Moderate PeriodFavorable Period
Unfavorable Period
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Economic Periods Effects Success Rate by Occupation
Count of Records
Count of Records Count of Records
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Cellphone Contact Appears More Promising
Success Rate was higher for Cellular Contact > Telephone Contact
Unfavorable
Moderate
Favorable
Count of Records
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Target Segments that Achieve Higher Success
UNFAVORABLE PERIODCluster 2
FAVORABLE PERIODCluster 1
MODERATE PERIODCluster 3
Cellular
RetiredEntrepreneur
AdminBlue Collar
Services
Success Rate of 41.31%
(Avg. 37%)
Cellular
RetiredStudent
HousemaidUnemployed
Admin. Self-Employed
Technician Management
Success Rate of 23.44%(Avg. 18%)
Cellular
RetiredStudent
Self-Employed Entrepreneur
Success Rate of 6.68%
(Avg. 5%)
COU
NT
COU
NT
COU
NT
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Achieving Success Efficiently
Previous Campaign Targeted Campaign
Number of Customers
35,563 6,915
Success Rate 8.83% 19.69%
Hours Spent 2,539 525
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Targeting for Success
Campaign Targeting based on Economic Conditions
Cellular Contact over Telephone Contact
Less than 6 calls to each customer
Optimize Duration of Call based on Job Function
Train Call Center • Focus on quickly identifying consumer characteristics • Creative techniques to reach optimum durations
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Next Steps
Focus group On “successful” people from the group for each period and
understand factors that make them take a loan deposit. Focus on successful groups
Retired and students were our best groups with success rates during every period of the economic change but they were the least contacted during the campaign.
Gather additional information including variables such as: Time of the call, Income, Credit Limit, Etc. Enable prediction of duration
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THANK YOU!