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3 Scenarios where Predictive Analytics is a must!

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At the end of the session, you will be able to :

✓ Types of Analytics

✓ Why Predictive Analytics?

✓ Domains where predictive analysis is creating magic

✓ 3 Scenarios where Predictive Analytics is Must

• Churn prediction

• Sentiment Analysis

• Recommendation

Agenda

Hands on

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Types of Analytics?

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Types of Analytics

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Next-Generation Analytics

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Source : gartner

Analytics in Future

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What is Predictive Analytics?

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Predictive analytics is the analysis of data by using statistical algorithms and machine-learning techniques to identify the likelihood of future outcomes based on historical data.

Predictive Analytics

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Predictive Analytics Lifecycle

Source: blogs.sas.com

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Advantages Predictive Analytics

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Why Predictive Analytics?

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Only Analytics Is Not Enough!

Predictive analytics is a game-changer — it’s like “Moneyball” for… money.

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Forbes Says

Source: Forbes

The top objective for between two-thirds and three-quarters of executives is to develop the ability to model and predict behaviours to the point where

individual decisions can be made in real time, based on the analysis at hand.

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Predictive Analytics Is A Game-Changer

Source: Forbes

Best Buy determined 7% of its customers were responsible for 43% of its sales. The company then segmented its customers into several archetypes and redesigned stores

Olive Garden uses data to forecast staffing needs and food preparation requirements down to individual menu items and ingredients.

The U.K.’s Royal Shakespeare Co. theatre company then developed a marketing program that increased regular attendees by more than 70% and its membership by 40%

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Major Domains Using Predictive Analytics

DatingBanking

Retail

E-commerce

Trading

IT Industry

Transport

Healthcare

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3 Scenarios where Predictive Analytics is Must

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Churn Prevention and Customer Lifetime Value

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What Is Churn/Attrition ?

When your customers reduce their usage or completely stop using your products or servicesThey are leaving your brand and might be shopping with your competitor

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1. Reduce marketing

costs - maximize

profits

2. Reduce churn

through predictive

models3. Segment market into

alike clusters as per their profits4.

Understand customers

& their behaviors

5. Adversely impacts

the profitability

of organizatio

n

6. Cost of acquiring

new customer is much higher

than retaining existing

customer

7. Reduce the loss of

referrals via the existing customers,

if they churn out

Reasons For Doing Churn AnalysisMost important reasons for doing churn analysis:

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Why Churn Prediction

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Cost to acquire a new customer is 5X

higher than retaining existing

customer

Top 30% of existing customers

comprise 100 – 150 % of your

profitability

10 – 20 % churn annually

High churn rate will impact growth – Relying on new

customers is not a sustainable

strategy

How does it affect business

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Identify :

• Which of customers are churning

Evaluate :

• What is the churn rate

Measure:

• What is the financial loss

Monitor :

• How is it trending

What we can do about itAnalyze the following traits :

Market Research :• Cost is high• Customer service issue• Competitor has superior service

Segmentation :

• Divide you customers in categories• Monitor each segment trend

Predictive modeling :

• Which customers are like to churn• Which customers are the most profitableProactive marketing and retention strategies:• Use your insights to re-engage your

customers• Create separate strategies for each segments

Action Plan To Combat :

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Predictive ModelChurn likelihood and profitability matrix :

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Flow of Churn Analysis

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How It Goes

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Sentiment Analysis

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Sentiment Analysis

Generally speaking, sentiment analysis aims to determine the attitude of a speaker or a writer with respect to some topic or the overall contextual polarity of a document.

The attitude may be his or her judgment or evaluation ,affective state (that is to say, the emotional state of the author when writing), or the intended emotional. … Wikipedia

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Sentiment Analysis Flow

Text Input Tokenization

Stop word filtering Negation handling

Classification Sentiment class

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Recommendation

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Source: http://fortune.com/tag/predictive-analytics/

E-Commerce using it for recommendation!

Recommendation

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This is how Amazon’s recommendation engine works

Amazon : Case Study

Questions

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