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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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