Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11...

30
© 2010 IBM Corporation Business Analytics software Predictive Marketing for Banking Tony Firmani – Predictive Analytics Solution Architect

Transcript of Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11...

Page 1: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation Business Analytics software

Predictive Marketing for Banking

Tony Firmani – Predictive Analytics Solution Architect

Page 2: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

2 2

§ Data Drives Decisions

§ Applying Predictive Analytics Throughout Entire Customer Lifecycle

§ Q&A

Session Overview

Page 3: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

3

DATA DRIVES DECISIONS

Page 4: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

4

82% of CEOs want to

better understand customer needs

88% 85% of CEOs require more

visibility into their businesses

For CEOs – It’s About Greater Customer Intimacy

Businesses are focused on understanding their customers to drive more/greater business value with their marketing spend

of CEOs will focus on getting closer to their customers in next 5

years

Page 5: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

5

Clients do not trust banks to offer products and services that are in clients’ best interests

0% 10% 20% 30% 40% 50% 60% 70%

n = 711

Provider Opinion: Providers offer products in the firm’s best interest (Percentage of Survey Respondents1)

Americas

EMEA

AP

Note: 1Question asked: To what extent do you agree / disagree with the following statements about trust, Please rank on a scale of 1-6 where 1=strongly disagree and 6=strongly agree, Investment firms are likely to offer products & services in the investment firm’s own best interest IBM / CFA Survey 2008; IBM Institute for Business Value analysis

Client Opinion: Providers offer products in the firm’s best interest (Percentage of Survey Respondents1)

Trust Gap

Strongly agree

n = 762

0% 10% 20% 30% 40% 50% 60% 70%

Neutral

Strongly disagree

Page 6: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

6

Lack of information and current pace of business forces organizations to be overly dependent on intuition

6

7%

46%

39%

8%

Source: EIU launch survey for IBM BAO, 2009 Question 1: How often have you made major decisions with incomplete information or information you don’t trust? Question 2: To what extent do you make business decisions based on the following factors?

How do you make business decisions?

Do you have sufficient information to do your job?

“Guestimation” has worked up to a point (arguably we’ve passed it)

Nearly half said “no”

Analytically derived

Personal experience and intuition

Collective Experience

Less extent

Large extent

25%19%

9%

54%

43%

43%

28%

35%

5% 9% 14%15%

Intuition dominates

Page 7: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

7

Customer Intimacy Means Evolving Improving process and analytics goes hand in hand

Business Operations Maturity

Information and Analytics Maturity

How the business applies information to achieve its goals

• Policies • Business

Processes • Organization

How the business manages information and learns from it

Spreadsheets

Data warehouses, governance and production reporting

Process automation and workflow

Master data management, dashboards and scorecards

Task integration

Business process integration and collaboration

Predictions, contextual business rules and patterns

Source: Breaking Away with Business Analytics and Optimization:, Q4 09 www.ibm.com/gbs/intelligent-enterprise.

Breakaway Real-time analytical

Impact

Adhoc

Foundational

Competitive

Differentiating

Page 8: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

8 8

Data at the heart of Predictive Analytics

Behavioral data - Trades - Transactions -  Payment history -  Usage history

Descriptive data -  Attributes -  Characteristics -  Self-declared info -  (Geo)demographics

Attitudinal data - Opinions -  Preferences -  Needs & Desires -  Social Media

Interaction data -  E-Mail / chat transcripts -  Call center notes -  Web Click-streams -  In person dialogues

“Traditional”

High-value, dynamic - source of competitive differentiation

Page 9: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

9 9

“SMA is the use of insight, derived through social listening and predictive analytic

techniques, and embedded within business processes, that enable an organization to more

effectively interact with consumers by leveraging the collective intelligence of the

global consumer community.”  

9

What is Social Media Analytics?

Page 10: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

10 10 10 10 10

Enhance their Reputation

Understand their customer needs to target new offers and products more cost-effectively through different social media channels and then use SMA insight to predict impact of these introductions

Creating Relationships. Building Advocacy. Improving Loyalty

Evaluate their corporate reputation and make evidence-based messaging decisions that target the right stakeholders at the right time and then use SMA insight to predict the impact on reputation

Improve their Customer Care

Respond more quickly with accurate, timely and relevant insight into customer requests to ensure a consistent brand experience across all channels and then use SMA insight to predict impacts on customer satisfaction

Grow their Business

What does SMA allow customer to achieve?

Page 11: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

11 11

Predictive Analytics –

•  Predict impact on sentiment of messaging decisions with analysis into consumer and stakeholder sentiment; Predict impact of changes in perception of your corporate reputation, potential reactions to campaigns and business KPI’s such as revenue, customer service levels, customer satisfaction

•  Use predictive analytics to identify and target new social media channels to drive greater advocacy of your products and services with key influencers based on predictive analysis of sentiment

•  Predict the effectiveness of your campaigns’ messages and their impact on consumers’ purchasing decisions, as well as the resonance and believability of their promise.

Predict impact of positive/negative sentiment on current business KPI’s and future social media activities

Capture Predict Act

Predictive Models

Impact of sentiment on KPI’s

Association Clustering Classification Forecasting

Marketing Data

Sales Data

Third-party Data

Customer Service Data

Financial Data

Business Rules

Make expert knowledge explicit

SMA DataOptimization

Define decision optimization

Produce Scores & Recommendations

Integrate with Social Media

Execute

Perform Social Media Campaign

Scoring

Deploy Decision Models

Prevent

Pro-active manage reputation

Feedback SMA

Perform Root-Cause Analysis

Upda

te E

xper

t

Know

ledg

e

Process Automation & OptimizationAutomate prediction & deployment process

Process Management & Control

Monitor & manage analytics process

Deploy

Integrate

Capture Predict ActCapture Predict Act

Predictive Models

Impact of sentiment on KPI’s

Association Clustering Classification Forecasting

Marketing DataMarketing Data

Sales DataSales Data

Third-party DataThird-party Data

Customer Service Data

Customer Service Data

Financial DataFinancial Data

Business Rules

Make expert knowledge explicit

SMA DataSMA DataOptimization

Define decision optimization

Produce Scores & Recommendations

Integrate with Social Media

Execute

Perform Social Media Campaign

Scoring

Deploy Decision Models

Prevent

Pro-active manage reputation

Feedback SMA

Perform Root-Cause AnalysisPerform Root-Cause Analysis

Upda

te E

xper

t

Know

ledg

e

Process Automation & OptimizationAutomate prediction & deployment process

Process Management & Control

Monitor & manage analytics process

Deploy

Integrate

Page 12: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

12

APPLYING PREDICTIVE ANALYTICS DELIVERS THROUGHOUT ENTIRE CUSTOMER LIFECYCLE

Page 13: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

13

How to develop customers insights?

What KPIs/ reports are needed to

effectively track business

performance?

•  How to understand customer usage and spend patterns?

•  Based on what parameters should customers be segmented?

•  What data is required?

•  How to integrate data in ‘One-view’ mode?

•  How to track risk performance?

•  How to track campaigns performance?

•  What KPIs / reports are required?

How to grow the portfolio profitably?

How Banks Can Use Customer Data and Analytics

•  Who are the high-value customers?

•  How to retain these customers?

•  What is the right product to cross-sell/up-sell and to whom?

Gain Customer Insights

Manage Churn, Cross-Sell

Track Performance

How to leverage insights to acquire right

customers?

•  How to identify & acquire ‘good’ customers?

•  How to boost my acquisition efforts?

Improve Acquisition

How to monitor and control Credit Risk?

•  How to improve underwriting?

•  How to minimize credit loss while achieving growth?

•  How to improve collection efficiency?

Manage Risk

How to identify and define the right offer

and positioning?

•  How to establish potential market opportunity?

•  What value proposition will help capture the potential?

•  How to take the offers to market effectively?

Differentiate Positioning &

Offers

Page 14: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

14

Smarter Planet Means Moving Away from the Broad Brush Impacting Customers Uniquely Throughout the Lifecycle

One to One

Purchase More Advocate

Product

Research & Purchase Product

Use Product

Get Customer Service

The Broad Brush

Page 15: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

15

Customer Intimacy Means Different Focus at Each Stage Marketing

Support/Services Feedback Management

Social Intelligence

Feedback

Dialog

Sales Selection & Acquisition

Extension

Support

Retention

Purchase More Advocate

Product

Research & Purchase Product

Use Product

Get Customer Service

Page 16: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

16

This Approach Supports Customer Lifecycle Management Needs

Risk Analytics

Risk Strategy

Application/Behavior Scorecard and Strategy

Collections Scorecard and management

Recovery Scorecard and management

Manage risk across customer life-cycle

Acquisition

Improve approval rate with application scorecard &

acquisition through analytics led campaigns

Segmentation

Enhance the understanding of customer base and

market through inward-outward (multivariate)

segmentation

Portfolio Management

Deepen relationship with customers through up-sell /

cross-sell of relevant products

Loyalty Management

Loyalty programs and right campaigns to increase stickiness to the bank

Retention /Attrition

Retention campaigns to stem voluntary attrition

Customer Life Cycle Management

Performance Management Executive Dashboard to track all essential Business KPIs

Gain Customer Insights

Prevent Churn, Cross-Sell

Track Performance

Improve Acquisition

Manage Risk

Differentiate Positioning &

Offers

Page 17: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

17 17

Inability to predict

Variety

Velocity Volume

Lack of insight

Variety

Smarter Banks Outperform with Analytics Changes in industry require new disciplines and tools

Predict and act

Real-time, fact-driven

Optimized

Everyone

Point of impact

Sense and respond

Instinct and intuition

Automated

Skilled analytics experts

Back office

Velocity

Lack of insight

Variety

Volume

Inability to predict

Inefficient access

Inefficient access Velocity

Velocity

Volume

Page 18: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

18

The Predictive Advantage

Traditional BI and Conventional Analysis: •  Branch Performance •  Profit and Loss Analysis •  Ad Hoc Analysis •  Product Performance

Insight Driven Predictive Analytics: •  Customer Segmentation •  Customer Profitability •  Market Basket Analysis •  New Branch / Market Analysis •  Customer and Investment Risk

Transformational Deployment of Predictive Models: •  Real-time Decision Management •  Optimized Outcomes Based Upon Objectives •  Deliver Cross-Sell Recommendations •  Dynamic Pricing Based Upon Risk and Profitability Models

Sense & Respond

Predict & Act

Page 19: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

19

Business Scenario: Customer Profitability

Customer Profitability With millions of

customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an

individual level?

Page 20: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

20

Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …

Customer Profitability With millions of

customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an

individual level?

Business Scenario: Customer Profitability

Page 21: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

21

Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …

Customer Profitability With millions of

customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an

individual level?

Customer Profitability Segmentation Segment customers based upon profitability measurements

High Profitability

Med Profitability

Low Profitability

Business Scenario: Customer Profitability

Page 22: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

22

Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …

Customer Profitability With millions of

customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an

individual level?

Monitor & Measure Customer Profitability

Customer Profitability Segmentation Segment customers based upon profitability measurements

High Profitability

Med Profitability

Low Profitability

Business Scenario: Customer Profitability

Page 23: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

23

Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …

Customer Profitability With millions of

customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an

individual level?

Customer Profitability Segmentation Segment customers based upon profitability measurements

Monitor & Measure Customer Profitability

Predictive Models Predict which products or services customers are most likely to accept

Business Scenario: Customer Profitability

Page 24: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

24

Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …

Customer Profitability With millions of

customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an

individual level?

Monitor & Measure Customer Profitability

Decision Management Optimize offers based upon profitability and response predictions

Predictive Models Predict which products or services customers are most likely to accept

Customer Profitability Segmentation Segment customers based upon profitability measurements

Business Scenario: Customer Profitability

Page 25: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

25

Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …

Customer Profitability With millions of

customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an

individual level?

Monitor & Measure Customer Profitability

Decision Management Optimize offers based upon profitability, risk and response predictions

Customer Interaction Deliver prioritized

recommendations that drive increased

profitability and are optimal for the customer

Predictive Models Predict which products or services customers are most likely to accept

Incr

ease

Cus

tom

er P

rofit

abili

ty

Customer Profitability Segmentation Segment customers based upon profitability measurements

Business Scenario: Customer Profitability

Page 26: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

26

Customer Data - Demographics - Account Activity - Product Holdings - Channel Activity - Information Requests - Complaints - …

Customer Profitability With millions of

customers, how do you identify which customers are valuable and how to increase the profitability of each customer on an

individual level?

Monitor & Measure Customer Profitability

Decision Management Optimize offers based upon profitability, risk and response predictions

Customer Interaction Deliver prioritized

recommendations that drive increased

profitability and are optimal for the customer

Predictive Models Predict which products or services customers are most likely to accept

Incr

ease

Cus

tom

er P

rofit

abili

ty

Customer Profitability Segmentation Segment customers based upon profitability measurements

Business Scenario: Customer Profitability

Page 27: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

27

You need to the answer now – or you lose…

Cross-sell? <context data>

<customer data>

Potential Campaign

Valid in this case?

Predicted Profitability

Response Probability

Expected Value

A No

B Yes 90 54% 49

C Yes 85 62% 64 C C

Leveraging Each Customer Contact as a Sales Opportunity

Customer

Page 28: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

28

Customer Intimacy Moves Beyond Sales and Marketing

• Customer Churn • Marketing Spend • Sales Productivity

Enhance Customer Understanding

• Customer Service • Channel Management • Research and Sales

Foster Collaborative Decisions

• Trading Advantage • Client Interactions • Customer Experience

Optimize Real-Time Decisions

• Risk Management • Social Business • Strategy Alignment

Enable Enterprise Visibility

Page 29: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

29

Key steps for achieving success

Source: Analytics: The New Path to Value, a joint MIT Sloan Management Review and IBM Institute of Business Value study. Copyright © Massachusetts Institute of Technology 2010."

Pick your spot

Continuous Value Delivery

Prove the value

Biggest and highest value opportunity

Start with questions Embed insights

Add capabilities Information agenda

Page 30: Predictive Marketing for Banking - Predictive Analytics World...Business Analytics software 11 Predictive Analytics – • Predict impact on sentiment of messaging decisions with

© 2010 IBM Corporation

Business Analytics software

30

Questions?

Thank You

30