Optimization in Data Mining Solutions:

Digitizing Customer Care2016/05/17

Objective: Customer Loyal Program

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Introduction

Project I: Customer Acquisition

Project II: Customer Retention

4 Conclusions

Every business needs to put efforts in both customer acquisition and retention to maximize revenues and lifetime customer value.

It requires information and just the right touch to generate a 360-degree view of your best customers and their buy-in for you to communicate with them in a meaningful way.

Consumers want to do business with you if they can relate to you and trust you, and they want you to align with their interests and values.

Creating this type of relationship requires responsive and relevant communications—all developed with the right data. By pulling in data from a variety of different sources, enterprises would have the power to create the foundation for true brand loyalty for your customers.

Introduction

Project I:Customer Acquisition

“Customer service is the new marketing.”- Derek Sivers, CD Baby

Build up customer ID system as a loyal customer profile via following data source:

Demographic Data

Basic attributes, such as age, gender,

household income, profession, or

geolocation

Behavioral data

Collecting behavior attributes such

as interests, preferences and

behavior via on-site, email, social,

and even off-site everyday.

Identify what increases

engagement by looking at time

spent on pages, number of clicks

and views, last touch points for exit

pages, and referral sources.

Transactional Data

Using purchase history can help

identify best and worst customers.

Bucket customers into groups such

as 0x buyers, 1x, 2x, or 3x+ for high

and low probability purchasers.

Source and Social Data

Know whether your customers

come from organic, social, or

affiliate channels. Look at how

social influence can help engage

your customers on-site and off-site.

1. Event-Based Marketing:

• Coupons will be sent when the user meets specific criteria

such as spending amount and purchase frequency or on his

birthday, holidays, etc.

• Coupon, Reward your high-valued customers by offering

better incentives to keep them returning.

2. Precise Marketing:

• Promoting Information or Marketing Campaign Info will be

sent according to age, preference and price sensitivities.

• Find the items and categories that are most frequently

purchased and engage other customers who may have similar

interests.

Wallet Share (皮夾深度)

Purchase Frequency (購買頻率)

Lifetime Value (存續價值)

Price Sensitivity (價格敏感度)

Product Preference (產品偏好)

Build up Customer Profiles According to the following factors

Project II:Customer Retention

“Customer service shouldn’t just be A department,

it should be the entire company.”- Tony Hsieh, CEO of Zappos

Importance of Customer Retention: Higher Probability and Lower Costs

Source: Marketing Metrics, White House Office of Consumer Affairs

Loyal customers account for about

20% of all customers. But that 20%

drives 80% of the total revenue and

72% of total visits to the business.

Over lifetime, loyal customers spend

10x more.

5-20%

6.0-7.0X

60-70%Success Rate of selling to an existing customer

Success Rate of selling to a new prospect

It is 6-7 times more expensive to acquire a new customer than to keep a current one.

The core value of Customer Retention is to distinguish “Desired and Dissatisfied” Customers from the whole customer groups and create new interaction systems to change their behaviors.

The system functions should include:• Analyze voice of customers to understand their emotions

• Collect information from social media or other sources to understand the market, including customer reviews and preference for the integration of Customer Profiles with our models.

• Analyze Customer Retention Campaign Effectiveness to evaluate whether to reach the expected benefits

• Forecast Customer Attrition Likelihood

• Forecast the possibility of Certain Product

• Adjust the Client & Market relationship strategies

• Measure the consuming behaviors and customer dissatisfaction to calculate and classify high risk of leaving and low risk of leaving customer segments. Then give differential compensations to different customer segments such as promoting information.

The Core Value of Customer Retention:To tell, to change

1. Based on Chainsea’s Text Records,

detect and find those dissatisfied

customers, who intend to switch to

other competitors .

2. Conduct the Event-Based Customer

Retention Service to retain customers.

High

Low

Low High

Customer Satisfaction

Customer Behaviors

Low Loyalty with High Satisfaction

Low Loyalty with Low Satisfaction

High Loyalty with High Satisfaction

High Loyalty with Dissatisfaction

Customer Segmentation

Trigger Warning

- CRM analytics- Text/search analytics- Marketing automation

COMPENSATION isThe Core Value of Customer Service

Customer Satisfaction Enhancement Process With different ranking set for customers, Coupon rate or related compensation can also be ranked

Membership Period

Spending Frequency

Log in/ Event Participation Frequency

Service/ Complaint Frequency

Modeling , Ranking and Classification

Warning Systems

Level_1

Level_2

Level_3

Email

Data Input and Modeling Process Compensation Process

Low-Cost High-Performance Model85% of churners can be accurately identified by using 30% of ranked customer data

100%

80%

60%

40%

20%

0%

0% 20% 40% 60% 80% 100%% of ranked churners

% o

f o

bse

rved

ch

urn

ers

10% 30% 50% 70% 90%

─ Validation Dataset─ Baseline

Conclusions:Further Steps

Building Precise Marketing GroupPrecision marketing is highly concerned about accuracy and focus.

Marketing(Acquisition) Purchase

After-Sales(Retention)

Brand Loyalty

Failed MarketingDissatisfaction Customers/Churner

Time Horizon

Cu

sto

mer

Life

cycl

e

Customer pattern recognition and

prediction model as a 360 degree

customer service system could evolve

from existing data to reach a higher level.

Strategy Execution Flow StageOur solution delivery team implements technology-based data solutions that give you 360-degree insight into your business.

Problem Statement

Granular Customer Insights

Insight Interpretation

Model Implementation

Execution Plan

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