BI & DM for CRM

1. Lecture 1 Gonca Gulser BI & DM for CRM

2. At the end of the course Create CRM strategy Able to use Social Nets as CRM platform Creating DM models for CRM Aware of marketing tools & platforms Able to use DM & BI tools What marketing is all about

3. Master Intro Marketing Strategy Acquisition Retention Prospect Lapsed (Gone) What is CRM? Social Nets – New World Social Nets Theory Social Nets as CRM platform Technology & Science in the Play Data Mining Data Warehouse & Data Mart Business Intelligence for Advance Reporting Where 's CRM? All effort is for Money – ROI as CRM success

4. Marketing Reminder Marketing is still Marketing Targeting Right Customer with the Right Product at the Right Time through Right Media

5. Marketing reminder cont... Types of Marketing Inbound marketing What specific groups of potential customers(markets) might have which specific needs – identification of market and product specs How product might be designed to satisfy specific needs – target marketing How each target market might choose to reach the product – sales channels\ packaging and etc... How much customers willing to pay and how – pricing strategy Who the competitors are – competitor analysis Why customer should choose your company – unique value proposition How the product should be identified (its personality) – naming and branding

6. Marketing Reminder cont... Inbound marketing example Louis Vuitton (http://www.louisvuitton.com) Customers & Specific Needs Target marketing (Product design for spec needs) Sales channels\ packaging and etc Pricing Strategy Competitor Analysis Unique Value Proposition Naming and Branding Google (http://www.google.com) Customers & Specific Needs Target marketing (Product design for spec needs) Sales channels\ packaging and etc Pricing Strategy Competitor Analysis Unique Value Proposition Naming and Branding

7. Marketing Reminder cont... Inbound marketing example Turkish Red Crescent Society (http://www.kizilay.org.tr/kurumsal/) Customers & Specific Needs Target marketing (Product design for spec needs) Sales channels\ packaging and etc Pricing Strategy Competitor Analysis Unique Value Proposition Naming and Branding

8. Marketing Reminder cont... Outbound marketing Advertising & Promotions Sales Customer Services Customer Satisfaction http://www.tvreklam.org/reklamlar/

9. Customer Types Acquisition First time buyers Hard to acquire (convince to buy) especially in mature markets Expensive for marketing (TV ads, radio, billboards, mass media appearance) Retention At least two time buyers Challenge – keep them as customer Easier then acquisition especially if satisfaction rate is high Cheaper for marketing (target product offers via e-mail or direct mail) Increase customer life time value – higher long term benefit for company

10. Customer Types cont... Prospects Never buy but contact somehow – Greater change to be acquisition They are also called targeted acquisition so cheaper Lapsed Purchased before but never heart from them for a long period of time Quite hard to retain (dissatisfaction could be cause) – need new strategies Clear understanding why they give up buying...

11. Marketing Platforms Offline – Real World Online – Digital World Whatever the World is.... Only Networks Matters

12. SN: Online Gigs Info Posting Friendship BLOGGERS –Speakers corner Follower Friendship Professional link

13. SN, not a new concept we just have different ways to do it Computer Mediated Social Nets Is it the reality? Is it a part of reality? Is it a different reality, we have not experienced before? No solid answer!!! We at least need to aware of these questions to get the max benefit out of SN in our business!!!!

14. Small World Phenomena What a Small World is it? Know a guy!!! A friend of a friend of a friend … İnterconnected nodes that connects sub-clusters (sub-nets) Small World After All

15. Stanley Milgram’s Experiment; He sent mails to random people in Kansas and Nebraska, and asked them to readdress the mail to their acquaintance who may know the “target” person in Boston. 6 People is Enough to Know the Whole Wide World

16. Suppose world’s population is 6.5 billion &each people have 50 acquaintances Degree 1 A person links 50 people Degree 2 = 250 people : Degree 5 = 0.31 billion people Degree 6 = 15.6 billion people Six degrees are enough for 6.5 billion Is 6 intermediary reasonable?

17. That is, there are k nodes which are reached with 1 step from a typical node. There arek2nodes with 2 steps. There arek3 nodes with 3 steps. There arekdnodes with d steps. Each node has averagely k links.There arekd nodes with dsteps. If k is big, the number of reachable nodes becomes very large, even if d is small. Why is the Degree so Small?

18. So far, we considered this world asRandom network. However, we know;Some people have more chance to meet with new acquaintance than other normal people do. Some portal sites, such as , is linking with more sites than other normal sites are. Scale Free Networks

19. Hub Nodes appers like Effect of Hubs Albert L. Barabasi, 2002, LINKED: The New Science of Networks

20. Scale Free Network makes the degree of distance of nodes be smaller since one person have more chance to connect with others through hub nodes, Therefore, this world becomes more smaller. FSN makes the world even smaller Richer gets richer

21. Map of Internet Internet Mapping Project: http://research.lumeta.com/ches/map/gallery/index.html

22. Hub Nodes have significant influence on any type of activity in the network Ability to direct more traffic to the selected nodes Able to spread more information Hub Nodes – Stronger effect

23. Users benefit from those sites Find friends Aggragate/create/ share/search info Entertainment Built new social relationships What about companies? Within the company – like Knowledge Mngt tool b/w company & customer Sales Marketing After Sales At the end, we are all social animals

24. Promote brand (e.x. Through fan groups in facebook) Promote the product Digging new ideas from people – weak ties Find new market opportunities Find different ways of marketing (especially viral marketing/ word of mouth) Feedback from customers For new marketing campaign For the new product … Evaluate your marketing efforts What do you want to get?

25. Technology & Science in the Play We store every data that we get... Sales/ customer support/ customer satisfaction and etc... What can we do with this mass data? Business Intelligence Data Warehouse & Data marts Data Mining

26. Bare in Mind Boundaries Company strategies Pre-set objectives Company policies Customer policies Product specs BUDGET!!!! If the SKY is the LIMIT Make sure right customer gets the right message Identify who most likely retain Identify likelihood of churn (lapsed) Increasing the success of targeting Offer most reliable product Support customer development to offer best product Increase customer satisfaction Gathering inside from outbound marketing Frontline (sales/customer services) can handle customer more efficiently and effectively

27. Data Mining on the Scene To do them all.... We aim to extract knowledge and insight from mass data, collected by operational CRM, using sophisticated modelling techniques

28. General Models of DM Supervised\Predictive Models Classification – Customer Segmentation Prediction – Acquisition models\ retention models\ churn models Unsupervised Models Clustering – Customer Segmentation Association