Segmentacia Trhu-Katarina Fruhwaldova

Customer
Segmentation
Katarna Frhwaldov
Company Confidential - For Internal Use Only

Copyright 2010, SAS Institute Inc. All rights reserved.
Customer Intelligence
Data for modeling process
Profile & Segment Customers
Tools
Demo

Tools
Demo

Customer Intelligence is the concept of

gathering, analyzing and exploiting information
of the company's customers with the aim to create
and maintain a mutually beneficial relationship
between the Organization and its Customers where
the Organization attempts to
maximize the Life Time Value of the relationship.

Marketing Analytics
MARKETING
MARKET
RESEARCH
MARKETING
ANALYTICS
RESEARCH

The task of Marketing Analytics
Marketing Analytics turns data into knowledge

(profits)
Marketing
Database
KNOWLEDGE
DATA
Operational
CRM

Marketing Analytics helps to answer...

More efficient
customer retention
Better Cross-/
Up-Selling
Recovery of
potentially
valuable customer
relationships
More efficient
acquisition of new
customers
Profit
Faster termination of
potentially less
valuable customer
relationships
Acquisition
Intensification
Retention
time
Termination/Recovery
7

Types of Analyses used in Marketing

Analytics
Fraud
Probability
Probability of
Default
Cross-sell
Probability
Segmentation
Product
Association
Expected Value
of Response
Channel
Preference
Up-sell
Probability
Churn
Probability
Activation
Probability
8

Customer Intelligence Definition

Tools
Demo

A Single Customer View
Simple Data
Customers
Derived / Additional Data

Contact/Response History
Households
Products
Transactions
Relationship Managers
Scores
Events
Surveys/Questionnaires
Demographics
Profitability Measures
Segments
10

Customer Data You Should Collect - Banking
Customer demographics (retail/corporate client)

Product information (number and types of products, loyalty)
Transactional behavior
Balances
Number, amount and types of transactions per defined time period

Average, opening and closing balances per defined time period.
Utilization of distribution channels
Complaints
Risk profile
Channel usage number (ATM, online, branch) per given time period.
Delinquency/claim (number and amount per defined period)
Household relations
Contact History
Competitive information
11

Customer Data You Should Collect Insurance

Customer Demographics
Relationship with the insurance company (tenure etc)
Product Portfolio (Policy and Riders Information)
Coverage Information
Claims Information
Premium and Payment Information
Agent Information
Complaints
Contact History
Competitive Information
12

Customer Data You Should Collect - Telco
Customer Demographics
Relationship with the insurance company (tenure etc)
Product Portfolio (number and types of products
prepaid/postpaid)
Messages Information
Airtime Information
Payment Information
Contact History
Competitive Information
13


Data for modeling proces
Tools
Demo
14

Terminology
Segmentation is in essence the process by which

items or subjects are categorized or classified into
groups with similar characteristics. That
characteristic could be one or more attributes.
Randal S. Collica
CRM Segmentation and Clustering
15

Clustering Example
Partition data into groups with similar characteristics.
16

Behavioral and Marketing Segments
Marketing segments - groups of customers who

are similar to each other with respect to some
socio-economic-demographic factors like: age,
sex, family status, occupation, living area etc.
Behavioral segments - groups of customers
who behave in a similar manner in relation with
the business.
17

Directed versus Undirected Segmentation
Supervised (directed) segmentation

business analyst defines one or more target
variables that should drive the segmentation
Unsupervised (undirected) segmentation
analytical algorithm uncovers hidden patterns
that may be significant and useful for the given
purpose.
18

Segmentation Process
1. Segmentation Objective Definition

2. Data Preparation/Model Development/Scoring
3. Segment Profiling
4. Identification of Segment Strategies
5. Implementation of Segment Strategies
6. Measurement and Evaluation
19

Segmentation Objectives
Improving profitability through more effective marketing

Serving better to high priority customers
Changing the customer mix to provide
a greater proportion of high-profit or high-profit-potential
customers in the customer base
Provide global vision of companys customers
Identify valuable customers
Identify cross-sell opportunities
20

10
Data Preparation Segmentation Variables
Active variables - variables, which are expected

to have an influence on clustering.
Descriptive variables - further profiling of the
segments that are determined by active
variables. They are used for identification of the
main characteristics of the clusters.
21

Number of Segments
Trial and Error Process

Good Cluster Definition (for CRM purposes)
clusters whose members are very similar to each
other while at the same time the clusters
themselves are well separated (by criteria
selected for clustering)
Business Purpose 5 to 12 segments
22

11
Segment Profiling
Explanation of the assigned customer segments

The result - characteristics of a typical customer within
each segment
Utilization in assigning the correct marketing segment
for each behavioral segment
The typical explanative variables used in profiling:
Age, Marital status, Occupation, Education level, Annual
income, Postal code (or information derived from that, such as
city, town, or village), Activity level of customer, Life cycle of
customer, Customers market segment, Residence status
code
23

Segment Profiling Example
24

12
Segment Scoring
Process of assigning the segment identification

variable for each customer on the basis of some
pre-specified segment structure.
25

Segmentation Reports
Customer Segment Size Report

Segment Movement Report
Migration
Distribution of Segments over Time
26

13
Segment Strategies
Define Segment Strategy and Action Plans for each Segment
WHO?
WHAT?
WHY?
HOW MUCH?
WHEN?
HOW?
Segment description. Differentiation comparing to

other segments.
What products, bundles?
Segments needs based message.
Pricing rules.
Time for interactions.
Preferred distribution channels.
27


Tools
Demo
28

14
SAS Enterprise Guide
Reporting, graphical and analytical tasks

Data management - preparation and cleaning
Statistical Analysis
OLAP access, visualization and manipulation
Result distribution and sharing
Administration and security
Scripting and automation
29

30

15
SAS Enterprise Miner:

Answers Questions Such As
Which customers are likely to respond to an offer?
Which transactions are likely to be fraudulent?
Which factors contribute to equipment failure?
Which prospects will be the best customers?
Which customers are likely to churn in short-term?
Which portfolios are likely to be the most risky?
Which claims are likely to be paid at less than
100%?
31

32

16

Tools
Demo
33

SEMMA Metodolgia
SAMPLE vzorky dt, vytvorenm jednej alebo
viacerch tabuliek
Append
Data Partition
Filter
Input Data
Merge
Sample
Time Series
34

17
SEMMA Metodolgia
EXPLORE preskmanie dt, hadanie
vzahov, vzorov, neoakvanch trendov...
Association
Cluster
DMDB
Graph Explore
Market Basket
MultiPlot
Path Analysis
SOM/Kohonen
StatExplore
Text Miner (optional)
Variable Clustering
Variable Selection
35

SEMMA Metodolgia
MODIFY prava dajov vytvranm novch
premennch, transformovanm, nahrdzanm
hodnt, rekdovanm...
Drop
Impute
Interactive Binning
Principal Components
Replacement
Rules Builder
Transform Variables
36

18
SEMMA Metodolgia
MODEL vytvranie modelu pouitm

analytickch metd
AutoNeural
Decision Tree
Dmine Regression
DMNeural
Ensemble
Gradient Boosting
MBR
Model Import
Neural Network
Partial Least Squares
Regression
Rule Induction
SVM
TwoStage
37

SEMMA Metodolgia
ASSESS vber najlepieho modelu, aplikcia
modelu na nov dta
Cutoff
Decisions
Model Comparison
Segment Profile
Score
38

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Segmentacia Trhu-Katarina Fruhwaldova

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Customer

Company Confidential - For Internal Use Only

Company Confidential - For Internal Use Only

Company Confidential - For Internal Use Only

Customer Intelligence is the concept of

Company Confidential - For Internal Use Only

Company Confidential - For Internal Use Only

The task of Marketing Analytics

Marketing Analytics turns data into knowledge

Company Confidential - For Internal Use Only

Marketing Analytics helps to answer...

Company Confidential - For Internal Use Only

Types of Analyses used in Marketing

Company Confidential - For Internal Use Only

Customer Intelligence Definition

Company Confidential - For Internal Use Only

A Single Customer View

Derived / Additional Data

Company Confidential - For Internal Use Only

Customer Data You Should Collect - Banking

Customer demographics (retail/corporate client)

Number, amount and types of transactions per defined time period

Utilization of distribution channels

Delinquency/claim (number and amount per defined period)

Company Confidential - For Internal Use Only

Customer Data You Should Collect Insurance

Company Confidential - For Internal Use Only

Customer Data You Should Collect - Telco

Company Confidential - For Internal Use Only

Customer Intelligence Definition

Company Confidential - For Internal Use Only

Segmentation is in essence the process by which

Company Confidential - For Internal Use Only

Company Confidential - For Internal Use Only

Behavioral and Marketing Segments

Marketing segments - groups of customers who

Company Confidential - For Internal Use Only

Directed versus Undirected Segmentation

Supervised (directed) segmentation

Company Confidential - For Internal Use Only

1. Segmentation Objective Definition

Company Confidential - For Internal Use Only

Improving profitability through more effective marketing

Company Confidential - For Internal Use Only

Data Preparation Segmentation Variables

Active variables - variables, which are expected

Company Confidential - For Internal Use Only

Trial and Error Process

Company Confidential - For Internal Use Only

Explanation of the assigned customer segments

Company Confidential - For Internal Use Only

Segment Profiling Example

Company Confidential - For Internal Use Only

Process of assigning the segment identification

Company Confidential - For Internal Use Only

Customer Segment Size Report

Company Confidential - For Internal Use Only

Segment description. Differentiation comparing to

Company Confidential - For Internal Use Only

Customer Intelligence Definition

Company Confidential - For Internal Use Only

SAS Enterprise Guide

Reporting, graphical and analytical tasks

Company Confidential - For Internal Use Only